ALZHEIMER'S INSTITUTE OF AMERICA, INC. v. AVID RADIOPHARMACEUTICALS et al

Filing 439

MEMORANDUM. SIGNED BY HONORABLE TIMOTHY J. SAVAGE ON 8/17/2016. 8/17/2016 ENTERED AND COPIES MAILED TO COUNSEL AND E-MAILED.(amas)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
CIVIL ACTION

ALZHEIMER'S INSTITUTE OF
AMERICA, INC.

v.
AVID RADIOPHARMACEUTICALS,

etal

NO. 10-6908
MEMORANDUM

Savage, J.

August17,2016

Finding that this was an "exceptional" case entitling the defendants to attorney's
fees under 35 U.S.C. § 285, we granted the defendants' motions for an award of attorney's
fees. Mem. Op. (Doc. Nos. 399-401 ). We deferred fixing the amount of the fees pending
a report of a Special Master. The Trustees of the University of Pennsylvania withdrew their
request for fees. Avid Pharmaceuticals ("Avid") continues to pursue its request.
Avid requested $6,867,219.31 for attorney's fees and expenses in the defense of
the patent claim filed by Alzheimer's Institute of America, Inc. ("AIA"). AIA contested both
the reasonableness of the time spent and the hourly rates charged.
In light of the volume of documents submitted in support of Avid's motion for
attorney's fees, we appointed, with the consent of the parties, retired Judge Gene D.
Cohen as Special Master ("Special Master") pursuant to Fed. R. Civ.

P. 53(a)(1)(B). The

appointment order directed the Special Master to prepare a Repor an? Recommendation
regarding the amount of attorney's fees to be awarded Avid.
Judge Cohen has 44 years of litigation experience in Philadf lphila in both the federal
and state courts. He served 18 years as a trial judge in the Cout of yommon Pleas, the
last five years of which were in the Commerce Court Division where he conducted and

managed complex civil litigation. He ruled on many requests for cou;nsel fees.
After retiring from the Court, Judge Cohen was a partner in a

~ajor law firm for ten
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years. There, he managed and supervised complex litigation, inclµding supervising a
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patent case. During his tenure, he was a billing attorney on cases an4 liaised with general
counsel of large national corporations. He is familiar with billing rates for lawyers in and
around Philadelphia.
Using his relevant experience as an attorney and judge, the Special Master
reviewed 333 pages of chronological billing by the Finnegan firm, 56 p~ges of billing by the
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Pepper firm, and 13 pages of billing by the Hogan Lovells firm.

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He also reviewed

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approximately 2,500 pages of motions, memoranda and exhibits, l~tters and notes of
testimony created or submitted in the request for attorney's fees, all ophosition papers, and
motions and rulings.

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The Special Master conducted a settlement/mediation conference. His efforts were
unsuccessful. Additionally, he held two days of hearings on general

an~ specific objections

to Avid's fee request.
The Special Master issued a Report, recommending an awara of $3,943,317.70,
reducing the total requested by $2,923,901.61. (Doc. No. 417).
The Special Master recommended Avid bear the cost of his 1
fee of $63,405.00.
Subsequent to issuing his report, he performed additional work in attempting to resolve the
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matter in light of his Report and Recommendation. He incurred an a:dditional $8,811.00
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in fees. Thus, the total Special Master's fee is $72,216.00.
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Avid timely filed objections to the Report. It has since advisedi that we need not
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rule on its objections. However, it is preserving them "for the purpos+s of any appeal of

the case that may be taken by AIA." (Doc. No. 438)
AIA also objected to the Report and Recommendation. Th~ objections will be
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overruled. The Special Master's findings are not clearly erroneous a~d are based on the
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evidence reviewed. AIA's objections to the Report were addresse~ in the Report with
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specificity. In essence, AIA contends that the Special Master did

no~ reduce Avid's fees

enough.
The Special Master requested AIA to file general and specific objections to the fee
request. We approve the method he used in reviewing the fee request.
AIA contended the fee request was so excessive it should be denied in its entirety.
The Special Master agreed that the request was excessive, but not outrageous, fraudulent,
or unconscionable.

He correctly concluded that even though a party did not act

fraudulently, the request may be excessive, warranting closer scrutiny and partial rejection
of the billings.
The Special Master found that Avid was justified in believing it was facing an
exposure in excess of $25,000,000. Accordingly, he concluded the request was not
obviously excessive. However, in light of the objection, he conducted a comprehensive
analysis with greater scrutiny.
AIA criticized Avid's time entries as reflecting severe overstaffing and overbilling.
Although the Special Master overruled this general objection, he examined carefully the
specific objections which were raised.
AIA complained Avid's time entries reflect blatant overstaffing even on particular
tasks. The Special Master agreed. He found that AIA's criticism was justified to an extent.
He reduced Avid's fees accordingly.

AIA objected to Avid's rates. The Special Master found the hourly rates requested
by the Finnegan firm and the Pepper firm were reasonable and within the general
guidelines of rates charged by law firms in Philadelphia and nationwide. His finding is
based on prevailing rates in the community.
AIA complained Avid conducted itself with excess "fact" billing on numerous
occasions. The Special Master concluded this objection had merit.
The remaining general objections were more specific in nature. The Special Master
determined they had some merit.

He discussed them in his rulings on the specific

objections. Having found most to have merit, he reduced the fee request for the amount
of fees requested for the specific task complained of and recommended reduction of those
fees.
As we noted, AIA essentially asserts Avid's fees should have been reduced by a
greater amount. These complaints question the expert judgment of the experienced
Special Master. The statements made by AIA in its objections to the Report do not justify
any further reduction in Avid's fee request.
We shall overrule AIA's objections, adopt and approve the Report and
Recommendation of the Special Master and enter judgment in favor of Avid and against
AIA in the amount of $3,943,317.70. We shall also order Avid to pay the Special Master
$72,216.00 for his service in this matter no later than August 31, 2016.