Ocean Innovations, Inc. et al v. Quarterberth, Inc. et al

Filing 433

Memorandum Opinion and Order granting in part (as it applies to ERA Marine) and denying in part (as it applies to George Dabrowski) (re 390 ) Plaintiffs' Motion for sanctions. The Amended answer, affirmative defenses, and counte rclaims against Ocean Innovations, Inc. and Jet Dock Systems, Inc. filed by ERA Marine are stricken. Default judgment is granted against ERA Marine in the amount of $15,627,000.00 on the patent infringement claim. The reward is joint and sever al as awarded in previous judgment (Doc. #332); Regarding attorney's fees, Plaintiffs shall file a record of billable time by 2:00 p.m. on 4/28/11; Defendant ERA Marine shall file a response by 2:00 p.m. on 5/4/11. Judge John R. Adams on 4/18/11.. Judge John R. Adams on 4/18/11. (K,C)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
OCEAN INNOVATIONS, INC. et al,
Plaintiff,
v.
QUARTERBERTH, INC. et al ,
Defendant.

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CASE NO. 1:03-CV-00913

JUDGE JOHN R. ADAMS

MEMORANDUM OF OPINION AND
ORDER

This matter came before the Court upon Plaintiffs’ Motion for Sanctions. Doc. 390. Since
June 2003, ERA Marine has failed to adequately and completely respond to Plaintiffs’ requests
for documents. Moreover, ERA Marine has ignored this Court’s numerous orders requiring it to
provide Plaintiffs with discovery. After considering the parties’ briefs and the testimony and
arguments made during the hearings, this Court GRANTS in part and DENIES in part Plaintiffs’
Motion for Sanctions.

INTRODUCTION
Plaintiff Ocean Innovations, Inc. owns United States Letters Patent Nos. 4,529,013,
5,682,833, 5,931,113, 5,947,050, and 6,431,106 issued by the United States Patent and
Trademark Office in 1996, 1997, 1999, 1999, and 2002, respectively. The patents each involve
the designs of floating drive-on dock assemblies. Plaintiff Jet Dock Systems, Inc. is the sole
licensee under each of the five patents. Plaintiffs allege that each of the defendants engaged in
making, using, selling, and/or offer for sale docks that infringed on one or more of Plaintiffs’

patents or induced others to make, use, sell, or offer for sale infringing dock(s). Plaintiffs argue
that throughout this litigation Defendant ERA Marine Products, Inc. has failed to adequately
respond to Plaintiffs’ discovery requests.

PROCEDURAL HISTORY
On May 15, 2003, Ocean Innovations, Inc. and Jet Dock Systems, Inc. (collectively,
“Plaintiffs”) sued Quarterberth, Inc. (“Quarterberth”), Noel W. Lott, Jr. aka Bill Lott (“Lott”),
Teo Leonard (“Leonard”), Gulf Coast Floating Docks, Inc. (“Gulf Coast”), Versadock,
Diversified Wholesale Marine, Inc. dba Sailorman (“Sailorman”), ERA Marine Products, Inc.
(“ERA Marine”), George Dabrowski dba PIC Marine (“Dabrowski”), James Alexander
(“Alexander”), and Roy Ahern (“Ahern”) in this action alleging infringement of various claims
of patents owned by Ocean Innovations, Inc. and licensed exclusively to Jet Dock Systems, Inc.
In 2006, Quarterberth and Alexander filed petitions in the United States Bankruptcy
Court for the Middle District of Florida, Tampa Division, being Case Nos. 8:06-bk-05293 and
8:06-bk-05292, respectively. On October 13, 2006, this Court entered a Judgment Entry
Perpetually Staying Further Proceedings Against Quarterberth and Alexander. Doc. 162.
Plaintiffs filed a Second Amended Complaint and Supplemental Complaint on November
11, 2008, alleging claims against Alexander, Quarterberth, Lott, Leonard, Gulf Coast,
Versadock, Sailorman, ERA Marine, Dabrowski and Ahern1. Doc. 209. On March 31, 2009, the
Court entered a Memorandum of Opinion and Order severing Plaintiffs’ claims against Lott and
dismissing them without prejudice for improper venue. Doc. 236, page 14. The Court also
found that Versadock was a partnership, not a dba of ERA Marine. Doc. 236, page 8. The Court

1

The proceedings remained stayed against Alexander and Quarterberth. Hereinafter, the term “Defendants” will
refer to defendants Leonard, Gulf Coast, Versadock, Sailorman, ERA Marine, Dabrowski, and Ahern, collectively.

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determined it has personal jurisdiction over Versadock as well as ERA Marine, Ahern, and
Leonard, Versadock’s individual, nonresident general partners. Doc. 236, page 8.
On June 26, 2009, this Court entered a Memorandum of Opinion and Order addressing
the validity of claims 1 and 15 of U.S. Patent 5,529,013 and claim 28 of U.S. Patent 5,931,113.
Doc. 238. The Court found these three claims valid as against all the allegations of invalidity
raised by ERA Marine.
On September 30, 2009, this Court entered a Memorandum of Opinion and Order,
finding that certain of the docks sold, offered for sale, or assembled by Defendants infringed
claims 1 and 15 of U.S. Patent 5,529,013 and claim 28 of U.S. Patent 5,931,113. Doc. 243.
Plaintiffs moved for a preliminary injunction barring the sale of certain docks sold by Defendants
on October 5, 2009. Doc. 247. On October 26, 2009, this Court granted Plaintiffs’ preliminary
injunction. Doc. 272.
On December 11, 2009, the clerk entered default against Leonard, Gulf Coast, Sailorman,
Ahern, and Versadock for failing to answer, move, or otherwise plead as required by law. Doc.
307. Plaintiffs and Leonard then entered into a settlement agreement, and the Court entered an
Agreed Judgment, thus dismissing Leonard. Doc. 326. On May 14, 2010 the Court awarded
Plaintiffs judgment against Sailorman, Ahern, Versadock and Gulf Coast, jointly and severally,
in the amount of $15,627,000 plus attorneys’ fees. Doc. 332. The Court thereafter entered a
Permanent Injunction against Sailorman, Ahern, Versadock and Gulf Coast and permitted
Plaintiffs to engage in post-judgment discovery to ensure compliance with the permanent
injunction. Doc. 333.
Plaintiffs filed a Motion for Sanctions against ERA Marine and Dabrowski on July 9,
2010. Doc. 390.

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BACKGROUND INFORMATION
In Plaintiffs’ first set of discovery requests served on ERA Marine on June 16, 2003,
Plaintiffs requested: “All documents that refer or relate to any sales by you of floating docks or
offers by you to sell floating docks, including, without limitation, purchase orders, invoices,
quotations, sales receipts, order acknowledgements, proposals and shipping documents.” See
Doc. 38- 2, Document Req. No. 3. ERA Marine responded on July 21, 2003, and objected to the
request as seeking proprietary and/or confidential information. See Doc. 38-2.
On September 12, 2003, Plaintiffs moved to compel ERA Marine’s responses stating that
they needed “full discovery regarding [ERA Marine’s] sales of and offers to sell floating docks
and the relationship (including an apparent conspiracy to infringe Jet Dock’s patents) among
Defendants. [ERA Marine], however, [has] refused to provide the needed discovery, as discussed
below, and thereby [is] attempting to delay the progress of this case.” Doc. 38. Plaintiffs further
argued that “[ERA Marine’s] refusal to provide the details of [the] floating dock sales and the
identities of the dealers selling such docks is unsustainable. Pricing information is needed to
establish the amount of profits [ERA Marine] generated on [its] infringing sales for which [ERA
Marine] must make an accounting to Jet Dock.” Doc. 38. ERA Marine agreed to provide the
requested information but only after the Court issued a protective order. Doc. 44, page 4 & Doc.
46.
Discovery closed on January 14, 2004. On March 26, 2008, Plaintiffs moved for leave to
take discovery concerning floatation units sold by ERA Marine since the close of the discovery
period. Doc. 166. Plaintiffs intended to seek discovery “relating to the structural changes to
[ERA Marine’s] floatation units, the reasons for those changes, and the number and style of
docks sold[.]” Doc. 166. Plaintiffs stated that such discovery was “necessary to update Jet

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Dock’s damage calculations as well as to explore [ERA Marine’s] new, infringing designs.” Doc.
166, page 2. During a status conference on September 25, 2008, the Court granted Plaintiffs’
Motion to Take Additional Discovery. Doc. 206. Specifically, the Court ordered: “Discovery is
reopened and shall be completed on or before seven (7) calendar days before the mediation
conference.” Doc. 206.
On September 26, 2008, Plaintiffs served their Second Request for Documents and
Things upon ERA Marine. Doc. 228-1, page 6. Plaintiffs requested:
1.

All documents that relate to tooling used to manufacture Components
including engineering drawings of tooling, engineering drawings of
Components or pieces of Components, correspondence, purchase
orders, financing documents, invoices, shipping documents, and
documents relating to payments to tool makers.

2. All documents that relate to the purchase, e.g., from a molder, of
Components to be assembled into floating docks, including technical
specifications or technical drawings related to the Components,
purchase orders, e.g., to a molder, shipping documents, invoices for
Components purchased by any of the defendants, financial records
including financing documents relating to the purchase of
Components, and all records relating to or reflecting payment for
Components.
3. All documents relating to the sale of Components by the defendants,
e.g., to a distributor or end user, including purchase orders, invoices
and documents reflecting payment received by the defendants for
Components, shipping documents relating to the shipment of
Components to purchasers, and documents describing or relating to the
configuration into which the Components were assembled or intended
to be assembled.
4. All documents that relate to the reasons for changing from any of the
versions to another design or configuration for closing Components.
5. If defendants will argue that $20/floatation unit exceeds a reasonable
royalty, then plaintiffs also request all documents that reflect expenses
chargeable against income derived from the sale of floating drive-on
docks by defendants.

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6. A representative sample of each float other than floats purchased from
Candock, Version 1, and Version 2. This request specifically includes
a sample of the floats referred to by defendants’ counsel at the status
conference held September 25, 2008.
Doc. 228-1.
On November 18, 2008, ERA Marine had not yet responded to the discovery requests.
Plaintiffs requested a status conference to discuss both ERA Marine’s failure to respond and its
counsel’s recent motion to withdraw as counsel. The Court conducted a status conference on
November 26, 2008 and scheduled an evidentiary hearing on December 22, 2008 to hear
testimony from Roy Ahern and Teo Leonard regarding the whereabouts of documents not yet
produced to Plaintiffs2. Doc. 216 & 221. After a partial hearing, the Court continued the hearing
until January 9, 2009, and ordered the parties to submit updates on the status of the discovery
sought by the Plaintiffs.
As of January 9, 2009, despite receiving over 4,000 documents from ERA Marine,
Plaintiffs contended that the production was incomplete. Doc. 224. Plaintiffs stated that ERA
Marine had not produced invoices or correspondence from tooling manufacturers nor documents
originating with tool makers or correspondence with tool makers nor invoices. Additionally,
although ERA Marine produced many documents relating to the sale of components by it for the
period January, 2003 through August, 2008, Plaintiffs asserted that the production was
incomplete. Doc. 224. ERA Marine also failed to produce any documents relating to its change
in design of its closing units or to expenses chargeable against income derived from the sale of
floating drive on docks. Doc. 224.

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As of December 22, 2008, all original defendants except Quarterberth and Alexander remained active parties in the
litigation. In June of 2010, after issuing a permanent injunction against Ahern, Versadock, Gulf Coast, and
Sailorman, the Court specifically permitted Plaintiffs to conduct discovery on the defaulted defendants. Doc. 333.

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At the conclusion of the hearing on January 9, 2009, the Court ordered ERA Marine to
produce the following by January 19, 2009:
1. Any and all documents and underlying data, for the time period
2001 forward, used to create the recapitulation or summary that
Mr. Ahern referred to during his testimony, that show the number
of molds purchased from the six molders of flotation units and the
number of flotation units that have been sold;
2. The audit report that was prepared as a result of an audit conducted
by John Reuter; and
3. The QuickBooks data from the defendants’ entire Minnesota
operation that was relied upon in creating the summaries Mr.
Ahern referred to during his testimony.”
Doc. 227. The Court also ordered Ahern to appear for a deposition on or before January 20,
2009, in order to give testimony including, but not limited to, the subject of why the design of
ERA Marine’s flotation units had changed from versions 1 to 2 to 3 over time. Doc. 227. During
both the December and January hearings, this Court warned ERA Marine of the importance of
complying with its discovery obligations and of the consequences of failing to comply.
Despite the Court’s order, ERA Marine did not provide the discovery to Plaintiffs by
January 19, 2009. Although Plaintiffs had not received the requested discovery, the parties
participated in mediation on January 21, 2009. During the mediation, the parties entered into the
following stipulation regarding the number of infringing units sold by Defendants:
It is agreed that 100,000 floatation units have been incorporated
into docks sold by the Versadock entity referred to in the Second
Amended and Supplemental Complaint and ERA Marine Products,
Inc. in the U.S. that plaintiffs have accused as infringing the
patents in suit through the entry of judgment by the trial court.

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Doc. 247-1. The stipulation was signed by Vytas Rimas on behalf of all represented defendants3
except Teo Leonard. On January 28, 2009, Plaintiffs filed a Motion for Sanctions requesting that
the Court issue a show cause order requiring ERA Marine to show why sanctions should not be
ordered to compensate Plaintiffs for the cost of addressing ERA Marine’s conduct and piecing
together the facts surrounding the quantity of infringing floats sold. Doc. 228. After conducting
a hearing on Plaintiffs’ Motion for Sanctions, the Court again ordered ERA Marine to provide
the documents to Plaintiffs but declined to impose sanctions. Doc. 251.
On November 4, 2009, during a status conference, ERA Marine agreed to provide the
remaining financial information to Plaintiffs. Doc. 291, page 32-33.
The Court held yet another conference on June 2, 2010 to discuss the status of the
discovery dispute and ERA Marine’s continued failure to provide certain requested documents to
Plaintiffs.

ERA Marine no longer agreed to the January 21, 2009 stipulation, which had

seemingly resolved part of the previous discovery issue. The Court ordered ERA Marine to
provide the requested documents and threatened sanctions should it fail to do so. The Court
ordered defense witnesses John Reuter and Janice Peterson to appear and testify at a hearing on
June 14, 2010, and to produce “all the documents (including the underlying purchase
documentation regarding floatation units) upon which [Mr. Reuter] relied in completing the audit
report and arriving at his conclusions as to how many units were produced and acquired” and “all
the documents [Ms. Peterson] relied on in compiling the QuickBooks summaries of flotation
units that ERA [Marine] had purchased from the six molders.” Doc. 362.
At the beginning of the hearing on June 14, 2010, ERA Marine provided Plaintiffs with a
CD that supposedly contained the remaining records that were responsive to Plaintiffs’ discovery

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Attorney Rimas has appeared in this matter on behalf of Defendants ERA Marine, Sailorman, Dabrowski, Ahern,
and Lott. Doc. 217, 218, & 220.

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requests and this Court’s numerous orders. Doc. 388, page 2. Defense witness John Reuter
testified regarding the contents of the CD. Doc. 388, page 13-46. Mr. Reuter did not access the
contents of the disc but testified that the CD contained ERA Marine’s financial data through May
2010 in a QuickBooks program format. Doc. 388, page 38-39. Mr. Reuter also testified that he
did not input the data into QuickBooks (Doc. 388, page 20-23), he did not review the source of
the data (Doc. 388, page 20-23 & 43), and he could not verify or identify whether the data
pertained to the sales of single floats versus double floats (Doc. 388, page 37-38). Mr. Reuter’s
knowledge of the data contained on the QuickBooks CD was limited to analyzing the data that
was input by someone else in order to perform tax related services. Doc. 388, page 37-38. Mr.
Reuter testified that he had never performed any form of “audit” of ERA Marine’s financial
records. Doc. 388, page 42-43.
Janice Peterson also testified regarding ERA Marine’s financial data that was supposedly
contained on the QuickBooks CD. Doc. 388, page 47-89. Ms. Peterson had worked for ERA
Marine from February 2008 through March 2009. Doc. 388, page 47. During that time she had
personally input the data from the purchase orders into the QuickBooks program. Doc. 388, page
56-57. She did not have any knowledge of the sales that occurred after March of 2009. Doc.
388, page 59. Ms. Peterson did not access the contents of the QuickBooks CD during her
testimony.
Neither of ERA Marine’s witness used the QuickBooks CD to demonstrate the contents
of the disc to the Court. Counsel for ERA Marine stated that he had not personally viewed the
disc, but yet represented to the Court that the disc contained all of the remaining requested
information. Plaintiffs’ counsel, having been handed the disc just prior to the hearing, could not
verify the contents of the disc at the hearing.

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Plaintiffs requested that the Court enforce the stipulation and award Plaintiffs attorneys’
fees and costs associated with the Plaintiffs’ efforts to obtain the requested information. At the
conclusion of the hearing, the Court took into consideration Plaintiffs’ request for attorneys’ fees
and costs and granted Plaintiffs’ motion to compel ERA Marine to produce the requested
information.
Plaintiffs later determined that the disc did not contain the documents that they had
requested. As of July 9, 2010, ERA Marine had still failed to provide the information, and
Plaintiffs filed a Motion for Sanctions and Request for Status Conference. Doc. 390. Plaintiffs
requested that the Court sanction ERA Marine and George Dabrowski, the remaining defendants,
by enforcing the January 21, 2009 stipulation and entering a default judgment against them for
their continued failure to respond to the discovery requests and follow the Court’s orders. Doc.
390. The Court held an evidentiary hearing on Plaintiffs’ motion on August 10, 11, and 16 of
2010.
During the August hearing, ERA Marine maintained that the QuickBooks CD contained
the documents requested and that it had complied with Plaintiffs’ discovery requests. None of
ERA Marine’s witnesses, however, demonstrated the contents of the QuickBooks CD. Instead,
Plaintiffs demonstrated that the discovery provided by ERA Marine was incomplete and
unreliable. Plaintiffs also demonstrated that the QuickBooks CD did not contain the documents
or data as ERA Marine had maintained.
After the close of the hearing, the parties submitted post-hearing briefs. Doc. 423, 425, &
426. ERA Marine admits it has not produced molder invoices for 2009-2010. Doc. 425, page 17.
Ms. Peterson’s testimony regarding invoice of ERA Marine’s sales of floats and docks only
assists in dealing with the QuickBooks data from February 2008 through March 2009 while she

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worked for ERA Marine. ERA Marine does not satisfactorily explain why sales invoices from
March 2009 forward have not been produced.
LAW AND ANALYSIS
Plaintiffs seek default judgment against ERA Marine and George Dabrowski and
enforcement of the stipulation entered into between the parties on January 21, 2009. The Court
has the power to dismiss a claim or enter judgment against a party for failure to comply with
discovery orders. Fed.R.Civ.P. 37(b)(2)(A). The “most severe in the spectrum of sanctions
provided by statute or rule must be available to the district court in appropriate cases, not merely
to penalize those whose conduct may be deemed to warrant such a sanction, but to deter those
who might be tempted to such conduct in the absence of such a deterrent.” Nat’l Hockey League
v. Metro. Hockey Club, 427 U.S. 639, 643 (1976). The Court also has the power, under Rule 37,
to assess attorneys’ fees and costs to the offending party or its counsel. Fed.R.Civ.P. 37(b)(2)(C)
and 37(d).
The Court considers four factors on a motion to dismiss or for default under Rule 37: “(1)
whether the party’s failure is due to willfulness, bad faith, or fault; (2) whether the adversary was
prejudiced by the dismissed party's conduct; (3) whether the dismissed party was warned that
failure to cooperate could lead to dismissal; and (4) whether less drastic sanctions were imposed
or considered before dismissal was ordered.” United States v. Reyes, 307 F.3d 451, 458 (6th
Cir.2002) (quoting Knoll v. Am. Tel. & Telegraph Co., 176 F.3d 359, 363 (6th Cir.1999)). No
one factor is dispositive. Id. “[D]ismissal [or default] is proper if the record demonstrates delay
or contumacious conduct.” Id.
The Court has the power to order default even in the absence of expressly considering
lesser sanctions; a motion to dismiss or for default is sufficient to put the offending party on

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notice that such a sanction is being considered. See id. The offending party has the burden to
show its failure to comply was due to its inability rather than willfulness or bad faith. Id.
Dismissal is presumptively appropriate if the party has the ability to comply with a discovery
order but has not. Id.
The Court also has the inherent power to sanction attorneys and parties before it for
contempt and abusive litigation practices. Roadway Express, 447 U.S. at 764-65; Jones v.
Continental Corp., 789 F.2d 1225 (6th Cir.1986). These powers include the power to dismiss a
case or to assess attorneys’ fees for acting in bad faith, vexatiously, wantonly, or for oppressive
reasons. Roadway Express, 447 U.S. at 766.
Sanctions as to ERA Marine
With these legal principles in mind, the Court has scrutinized all of the evidence before it
and is led to the inescapable conclusion that the most serious sanction of striking ERA Marine’s
Amended Answer, Affirmative Defenses and Counterclaims (Doc. 31) and entering default
against ERA Marine is warranted. At each stage of litigation ERA Marine and its counsel have
revealed only so much information as they deemed necessary even after the Court made clear
that it expected full candor and disclosure. Additionally, ERA Marine purposely and willfully
misrepresented to the Court that it had fully complied with the Court’s orders.
1.

Willfulness, bad faith, and fault

Upon review, this Court finds that the first factor weighs heavily in favor of default.
ERA Marine has failed to demonstrate that its failure to produce the requested documents was a
result of “inability,” as opposed to willfulness. Moreover, the Court is greatly disturbed by ERA
Marine’s flagrant disregard to this Court’s orders compelling the production of these documents
and by ERA Marine’s lack of candor to the Court. This Court finds there is ample evidence that

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ERA Marine’s failure to comply with this Court’s orders and produce the discovery sought by
Plaintiffs was willful and in bad faith. This Court gave ERA Marine numerous opportunities to
provide the requested documents, yet it chose to produce incomplete responses. ERA Marine
simply did not meet its burden to show that its failure to comply was due to inability rather than
willfulness or bad faith.
By example, ERA Marine represented that the QuickBooks CD given to Plaintiffs during
the June 2010 sanctions hearing contained all remaining documents that would allow Plaintiffs to
compute the total number of infringing docks or units sold by Defendants through May 2010 –
including the invoices to molders. During the June 2010 hearing, neither of ERA Marine’s
witnesses accessed the data contained on the disc.
ERA Marine again represented to the Court that the QuickBooks CD contained the
requested discovery during the August 2010 hearing. Despite the fact that the very purpose of
the hearing was to determine whether ERA Marine had sufficiently responded to discovery, ERA
Marine still did not produce a witness who had accessed the data contained on the QuickBooks
CD. Moreover, the only witness who had reviewed the underlying source documents for the data
on the disc was Ms. Peterson who only had knowledge regarding orders made from February
2008 through March 2009. No other witness had reviewed or offered testimony about the
underlying source documents.

Accordingly, no one could testify regarding the requested

documents or the disc’s purported satisfaction of Plaintiffs’ discovery requests. Instead, Plaintiffs
have demonstrated that the disc merely contains a glorified checkbook register and does not
include a complete set of invoices or purchase orders between ERA Marine and its molders or
suppliers4.

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ERA Marine’s presentation of accounting summaries and reports made from the data were not supported by any
underlying source documents or testimony (other than Ms. Peterson’s limited testimony) and are, therefore, useless.

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ERA Marine and its counsel have delayed the progression of this lawsuit by refusing to
provide proper discovery on ERA Marine’s sales of floating docks and/or units used to build the
floating docks. ERA Marine and Attorney Rimas affirmatively misled Plaintiffs – and more
importantly, this Court – as to the production of documents and compliance with Court orders.
Specifically, ERA Marine and Attorney Rimas misled the Plaintiffs and this Court in the
following ways:


After entering into a stipulation regarding the number of infringing units sold by
defendants, ERA Marine made contradictory statements regarding its intent to honor
the stipulation.



ERA Marine’s representative, Roy Ahern, represented to this Court that ERA
Marine’s accountant, John Reuter, had performed an audit of ERA’s finances, when
Mr. Reuter had not.



Ahern, on behalf of ERA Marine, and Attorney Rimas represented to the Court that
they had knowledge of the contents of the QuickBooks CD, when, in fact, neither had
viewed the information on the disc.



On behalf of ERA Marine, Ahern certified to the Court that the discovery production
was complete. Doc. 384-1.

Moreover, ERA Marine failed to show that the contents of the QuickBooks CD satisfied
the discovery requests. Despite ERA Marine’s contention that the disc satisfied its discovery
obligation, ERA Marine did not bring a software program to the hearing that would enable the
Court or ERA Marine’s witnesses to access the disc. In fact, ERA Marine presented no evidence
during the hearing that the disc contained the requested documents.

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At the Court’s request, Plaintiffs accessed the disc using Plaintiffs’ counsel’s laptop on
which the QuickBooks program had been loaded. Plaintiffs then demonstrated to the Court that
certain requested information was not contained on the disc. Doc. 421, page 54-69. For example,
Plaintiffs demonstrated that vendor invoices could not be obtained by using the QuickBooks data
provided by ERA Marine on the QuickBooks CD. Doc. 421, page 54-69. To the Court’s
astonishment, Attorney Rimas objected to Plaintiffs’ counsel’s use of the program, stating that it
was unfair that only Plaintiffs were allowed to demonstrate the disc’s contents. But when the
Court requested that Attorney Rimas access the program using Plaintiffs’ counsel’s laptop,
Attorney Rimas declared that he did not know how to use the program. Ahern, who attended the
hearing on behalf of ERA Marine, also did not know how to use the program. ERA Marine
represented to the Court during both the June 2010 and August 2010 sanctions hearings that it
knew the contents of the disc. Since that time, the Court has learned that ERA Marine had never
accessed the disc. It finds ERA Marine's representations during those hearings disingenuous.
Eventually, after significant trouble, ERA Marine pulled two invoices from the
QuickBooks CD, yet after further questioning by this Court, ERA Marine was unable to locate
additional invoices or demonstrate that all requested invoices were available on the disc. Instead,
Plaintiffs again demonstrated that other documents sought were not available on the disc.
2.

Prejudice

With regard to the second factor, this Court finds that Plaintiffs have been prejudiced by
ERA Marine’s misconduct. Discovery in this case was originally closed in January of 2004, and
reopened by this Court in September of 2008 to allow for the limited discovery that Plaintiffs
still seek. The requested discovery would supposedly show the number of infringing units sold,
made, used, or offered for sale by ERA Marine and would demonstrate whether ERA Marine has

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continued to engage in the sale of certain infringing docks even after this Court issued an
injunction. By failing to provide the discovery as ordered, ERA Marine has prevented Plaintiffs
from pursuing their claims and delayed this litigation for nearly seven years.
3. Notice
The Court finds that the third factor, i.e., notice of the severity of a possible sanction,
weighs in favor of the requested sanction.

The parties participated in numerous status

conferences, pretrial, hearings, and arguments regarding the discovery dispute. On multiple
occasions, this Court has warned ERA Marine of the consequences of failing to provide the
requested documents. For example, during the June 14, 2010 hearing, the Court warned that
sanctions could be imposed “up to and including judgment in favor of the plaintiffs[.]” Doc. 393,
page 20.

Moreover, Plaintiffs’ motion specifically requests a sanction of default, thereby

providing notice to ERA Marine of the severity of the sanction sought. See U.S. v. Reyes, 307
F.3d at 458.
4. Less severe sanctions
With regard to the fourth factor, the Court notes that it has considered less severe
sanctions. Specifically, the Court considered levying a fine against ERA Marine and its counsel
for the repeated misconduct. Given the procedural posture of this case, however, nothing short
of default judgment would be sufficient. This matter has been pending since 2003 and ERA
Marine has taken every opportunity to delay these proceedings. Moreover at this point, any
discovery provided by ERA Marine cannot be trusted as a complete response.

Plaintiffs

demonstrated numerous inconsistencies between discovery previously provided by ERA Marine
and documents obtained by Plaintiffs through other means. Additionally, ERA Marine’s own
acts and testimony revealed that discovery provided by it is unreliable and incredible. Time after

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time ERA Marine has ignored the Court’s orders. Thus, the severe sanction of default is
warranted.
George Dabrowski dba PIC Marine
Plaintiffs also requested that this Court enter default judgment against Dabrowski as a
discovery sanction.

In support of their request, Plaintiffs assert that Dabrowski is a joint

tortfeasor whose “liability rises and falls” with ERA Marine’s. (Doc. 426, page 8).
Dabrowski allegedly sold, offered for sale, and assembled infringing docks. He is, and
has always been, represented by the same attorneys as ERA Marine. The stipulation entered into
on January 21, 2009 was signed by Attorney Rimas on behalf of all defendants except Teo
Leonard.

Dabrowski appreared at the sanctions hearing in August 2010, but on multiple

occasions has been excused from personal appearance before this Court.
Dabrowski testified that he was not an employee of ERA Marine, that he had never
received compensation from ERA Marine, and that he did not have access to any of ERA
Marine’s corporate records. (Doc. 420, page 102-103). Plaintiffs do not assert that Dabrowski
failed to respond to discovery requests propounded upon him. Plaintiffs, however, request that
this Court sanction Dabrowski for his association with ERA Marine (and Ahern).
Plaintiffs have not set forth adequate grounds for this Court to sanction Dabrowski; nor
have they cited any case law to support the suggestion that Dabrowski must be sanctioned
because ERA is being sanctioned. Therefore, Plaintiffs’ Motion for Sanctions is denied as it
applies to George Dabrowski.

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CONCLUSION
WHEREFORE, for the foregoing reasons, Plaintiffs’ Motion for Sanctions (Doc. 390) is
hereby GRANTED IN PART and DENIED IN PART. Plaintiffs’ Motion for Sanctions is
granted as it applies to ERA Marine; the Amended Answer, Affirmative Defenses and
Counterclaims against Ocean Innovations, Inc and Jet Dock Systems, Inc filed by ERA Marine
Products, Inc. (Doc. 31) are hereby STRICKEN. Default Judgment is GRANTED against ERA
Marine as stated below.
Plaintiff’s Motion for Sanctions is denied as it applies to George Dabrowski.
JUDGMENT AGAINST ERA MARINE
1.

Plaintiff Ocean Innovations, Inc. is the owner by assignment of United States

Letters Patent Nos. 4,529,013, 5,682,833, 5,931,113, 5,947,050, and 6,431,106 (collectively, the
“Jet Dock Patents”); Plaintiff Jet Dock Systems, Inc. is the sole licensee under these five patents.
2.

The Jet Dock Patents have not been shown to be invalid.

3.

Defendant ERA Marine Products, Inc. has infringed on the Jet Dock Patents by

virtue of their actions in making, using, selling and/or offering to sell certain floating docks as
alleged in the Second Amended Complaint and Supplemental Complaint. Defendant ERA
Marine Products, Inc. has also induced others to practice the inventions covered by the claims of
the Jet Dock Patents and thereby infringe the Jet Dock Patents.
4.

The Jet Dock Patents are adjudged valid, and a judgment of infringement is

accordingly entered against Defendant ERA Marine Products, Inc. in connection with the past
sales of floating docks as alleged in the Second Amended Complaint and Supplemental
Complaint.

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5.

Defendant ERA Marine Products, Inc. entered into a stipulation with Plaintiffs on

January 21, 2009, whereby ERA Marine acknowledged that it made, used, sold, and/or offered
for sale floating docks, which incorporated 100,000 units that infringed the Jet Dock Patents.
The Court hereby enforces said stipulation as a discovery sanction against ERA Marine Products,
Inc. Thus, the amount of the requested default judgment is based on a stipulated sales volume of
100,000 infringing units.
6.

On account of ERA Marine’s infringement, Plaintiffs lost profits in the amount of

Five Million Two Hundred Nine Thousand Dollars ($5,209,000).
7.

A plaintiff is entitled to enhanced damages if the defendant willfully infringed the

patent. 35 U.S.C. § 284. Enhanced damages may be awarded upon a finding of willful
infringement or bad faith, which requires a showing of objective recklessness. In re Seagate
Technology, LLC, 497 F.3d 1360, 1371 (Fed.Cir. 2007). A patentee must make a showing of
objective recklessness “by clear and convincing evidence that the infringer acted despite an
objectively high likelihood that its actions constituted infringement of a valid patent.” Id.
ERA Marine acted with full knowledge of the existence of the Jet Dock Patents and the
rights of Plaintiffs and with notice to refrain from infringing Plaintiffs’ patents and so acted
willfully and deliberately to infringe the Jet Dock Patents.
8.

In view of the willful nature of the infringement, Plaintiffs are entitled to have

their damage award against ERA Marine trebled.
9.

Plaintiffs shall recover of ERA Marine the sum of Fifteen Million Six Hundred

Twenty-seven Thousand Dollars ($15,627,000) on the patent infringement claim. This award
shall be recovered jointly and severally with Sailorman, Ahern, Versadock, and Gulf Coast
against whom judgment was previously awarded (Doc. 332).

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10.

The awarding of attorney fees pursuant to 35 U.S.C. § 285 is an issue unique to

patent law that is subject to Federal Circuit law. Special Devices, Inc. v. OEA, Inc., 269 F.3d
1340, 1343 (Fed.Cir. 2001). A court may award reasonable attorney fees to prevailing parties
under § 285 if it finds, by clear and convincing evidence, that the case is “exceptional.”
Computer Docking Station Corp. v. Dell, Inc., 519 F.3d 1366, 1374 (Fed.Cir.2008) (citing
Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1551 (Fed.Cir. 1989)). Criteria
for declaring a case exceptional include willful infringement, bad faith, litigation misconduct,
and unprofessional behavior. nCube Corp. v. SeaChange Int’l, Inc., 436 F.3d 1317, 1319
(Fed.Cir. 2006) (citing Sensonics, Inc. v. Aerosonic Corp., 81 F.3d 1566, 1574 (Fed.Cir. 1996)).
The conduct of ERA Marine makes this case exceptional within the meaning of 35
U.S.C. § 285 and Plaintiffs are entitled to their reasonable attorney fees as the prevailing party.
Plaintiffs shall, therefore, recover of ERA Marine their attorney fees.
With regard to determining the amount of attorneys’ fees to be awarded, the Court will
allow the prevailing party to offer evidence of fees and allow the non-prevailing party to
challenge the reasonableness of those fees.
By 2:00 p.m. on April 28, 2011, counsel for Plaintiffs shall serve and file a full and
complete record of the billable time charged by the separate attorneys and law clerks for the
work performed in the case at bar in prosecuting and pursuing Plaintiffs’ patent infringement
claims against ERA Marine. ERA Marine shall file its response, if necessary, by 2:00 p.m. on
May 4, 2011. The filing of any motion, other than a motion for an extension of time – if granted,
will not stay the aforementioned deadlines.
At the close of this case, Plaintiffs shall serve and file a supplemental memorandum in
support of their application for an award of attorneys’ fees against ERA Marine.

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11.

Plaintiffs shall, within seven days of this Order, advise the Court whether

and how they intend to pursue their claims against Defendant George Dabrowski.

IT IS SO ORDERED.

April 18, 2011
Date

____/s/ Judge John R. Adams_______
JUDGE JOHN R. ADAMS
UNITED STATES DISTRICT COURT

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