Rothschild Connected Devices Innovations, LLC v. Guardian Protection Services, Inc.

Filing 104

MEMORANDUM ORDER. Signed by Magistrate Judge Roy S. Payne on 11/8/2017. (ch, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
ROTHSCHILD CONNECTED DEVICES
INNOVATIONS,LLC,

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v.
ADS SECURITY, L.P.

Case No. 2:15-CV-01431-JRG-RSP (Lead)
Case No. 2:15-CV-01463-JRG-RSP (Member)

MEMORANDUM ORDER
This case returns to the Court on remand from ADS Security, L.P.’s (“ADS”) appeal to
Court of Appeals for the Federal Circuit. See Rothschild Connected Devices v. Guardian Protec.,
858 F.3d 1383 (Fed. Cir. 2017). The Court of Appeals determined that this case should have been
declared exceptional under 35 U.S.C. § 285 and remanded the case to this Court for a calculation
of attorneys’ fees to be taxed against Rothschild Connected Devices Innovations, LLC
(“Rothschild”).
Shortly after the remand, this Court ordered ADS to submit a full accounting of fees and
costs sought under § 285 and afforded Rothschild a chance to respond. See Dkt. 97. ADS’s
submission accounts for and requests $288,911.99 in attorneys’ fees. Rothschild does not dispute
that the number of hours worked or the hourly rates are reasonable. Rather, Rothschild continues
to argue that the case is not exceptional—a conclusion that, according to Rothschild, has not been
foreclosed by the Court of Appeals’ mandate. In addition, Rothschild disputes the time period
during which any fees should be assessed.
Rothschild’s argument regarding whether the case is exceptional is clearly foreclosed by
any fair reading of the opinion of the Court of Appeals. The Court of Appeals reversed—as
opposed to vacated—this Court’s judgment, and within that judgment was a determination that the
case against ADS was not exceptional. An attorneys’ fees assessment under § 285 involves two
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questions, first whether the case is exceptional, and second whether fees should be awarded and if
so, in what amount. See Special Devices, 269 F.3d at 1344. The Court of Appeals disagreed with
this Court’s first step in the analysis concerning exceptionality. As a result, the only possible
conclusion is that this case is exceptional, leaving calculation of fees as the only matter to be
assessed on remand. The panel expressly stated, “The District Court on remand shall conduct
additional proceedings consistent with this opinion, including those pertaining to the calculation
of attorney fees.” Rothschild, 858 F.3d at 1390 (emphasis added).
The Court therefore rejects Rothschild’s argument that finding the case not exceptional
would be “consistent with the Federal Circuit’s opinion.” See Dkt. 101 at 1.

Similarly,

Rothschild’s argument that a fee award should be zero is not persuasive. ADS does not argue that
any fees claimed are associated with unreasonable time or an unreasonable hourly rate.
The only dispute regarding the amount of fees to be awarded is the time period during
which fees should be assessed. During oral argument on appeal, the panel acknowledged that there
is “nothing in the record” supporting an argument that the amount ADS’s fees is unreasonable. See
Oral Argument Tr. at 22:50-22:56. Rothschild’s argument is that fees should only be awarded to
the extent they were incurred prior to the case being dismissed on January 21, 2016. This argument
is not persuasive. As the Supreme Court recently explained, a court’s fee shifting authority is
constrained by principles of causation, much like the constraint on compensatory damages.
Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178, 1187 (2017). “Compensation for a
wrong, after all, tracks the loss resulting from that wrong.” Id. at 1186. After Rothschild’s case
was dismissed, ADS’s efforts focused exclusively on seeking attorneys’ fees, both at this Court
and at the Court of Appeals. The fees associated with those efforts would never have been incurred
if ADS had not filed this lawsuit. See Rothschild, 858 F.3d at 1391 (Mayer, J., concurring) (“This

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suit never should have been filed, and ADS deserves to be fully compensated for the significant
attorneys’ fees it has incurred.”).
In sum, and on this record, the Court should award ADS the full amount of fees it seeks.
Having reviewed ADS’s proposed fees and costs, the Court finds that the number of hours
expended and the hourly rates are reasonable. Rothschild does not seriously dispute the
reasonableness of ADS’s time or hourly rates. The Court will therefore not reduce the fee award.
Finally, ADS asks the Court to find Rothschild and its sole member, Leigh M. Rothschild,
jointly and severally liable for the fees award because the two entities are “one in the same.” Dkt.
100 at 3. There is insufficient evidence, however, that the Rothschild corporate entity will be
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unable to pay the fee award, and the record is not sufficient at this point to reach through the
corporate entity to the sole proprietor. Fees will therefore be taxed only against the Rothschild
corporate entity.
Accordingly,
It is ORDERED that Rothschild Connected Devices Innovations, LLC (“Rothschild”)
shall pay ADS (through its counsel of record) attorneys’ fees and costs in the amount of
$288,911.99. Payment shall be made no later than 30 days from the date of this Order, and
Rothschild shall promptly notify the Court when payment has been made.
SIGNED this 3rd day of January, 2012.
SIGNED this 8th day of November, 2017.

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ROY S. PAYNE
UNITED STATES MAGISTRATE JUDGE

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