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Category: Prevailing Party Issues

$13M Fee Award in Medical Device Patent Infringement Case

May 25, 2018

A recent New Jersey Law Journal story by Michael Riccardi, “Medical Device Makers’ Patent Infringement Battle Yields $13M Fee Award” reports that a Newark, New Jersey, federal judge has awarded $13.8 million in fee and costs to Zimmer Inc. after it came out the victor in a 13-year patent infringement battle with Howmedica Osteonics Corp.

U.S. District Judge William Walls made the award to Zimmer as the prevailing party after four patents that Howmedica claimed were infringed were found to be invalid. The patents, all carrying the title “non-oxidizing medical implant,” concern irradiating and heating polymers used in medical implants in order to extend the usable life of those implants. The suit said Zimmer sold products that infringed on Howmedica’s patents.

Walls granted Zimmer $13,296,559 in fees, which is nearly all the $13.5 million it sought, and granted the entire $513,258 in costs that the company  sought. But he rejected outright Zimmer’s request for $1.01 million in expert fees and for $5.8 million in prejudgment interest.

Walls awarded fees and costs after finding the litigation met the standard for an “exceptional case.” The judge said that standard was met for a variety of reasons. Among them was that an individual who testified before a patent examiner in the case on behalf of Howmedica, Aiguo Wang, failed to disclose at trial that he was an employee of that company. Walls also found that the case was exceptional because Howmedica failed to withdraw its infringement claims once it knew they were baseless, and the judge cited “selective disclosure of data and evasive responses” to a patent examiner by Howmedica.

Howmedica, for its part, argued that is had simply lost “11 years of hard-fought litigation between sophisticated competitors” over groundbreaking medical implants.

Walls ruled in 2007 that three of the patents were invalid, and the U.S. Court of Appeals for the Federal Circuit affirmed his ruling in 2010.  In 2009, Zimmer sought a re-examination of claims in the fourth patent, and the U.S. Patent and Trademark Office rejected the claims in that patent.

Howmedica, a maker of orthopedic devices, was acquired in 1998 by Stryker Corp. of Kalamazoo, Michigan. It claimed in the suit that Zimmer infringed its process for irradiating and heat-treating medical implant materials. Although this process was not novel, Howmedica claimed that its process of heating the materials at 50 degrees celsius for 144 hours was superior to similar methods. But Howmedica withheld key information from federal patent examiners during the course of the litigation, prompting their patents to be invalidated, according to court documents.

Zimmer, a maker of medical devices now known as Zimmer Bionet, is based in Warsaw, Indiana.

Howmedica has indicated that it will appeal the final judgment to the U.S. Court of Appeals for the Federal Circuit, according to court documents.

Zimmer was represented by lawyers from Kirkland & Ellis, Latham & Watkins and Tompkins, McGuire, Wachenfeld & Barry of Roseland, New Jersey. Walls said the Am Law 50 average was an appropriate basis for evaluating the hourly rates claimed by counsel from Kirkland & Ellis and Latham & Watkins, citing the highly specialized area of law, the expertise required and what he termed the “exorbitant” $2 billion in damages sought by Howmedica in the case. Some Kirkland & Ellis lawyers charged as much as $1,295 per hour, but Walls said, “The court also finds any billing rate over $900 to be unreasonable,” and he cut three lawyers down to that rate—Mark Pals, Bryan Hales and David Callahan.

Walls issued an order in the case announcing his ruling on April 24, but the reasons for his ruling were unknown until he unsealed a 39-page opinion on Wednesday.

Lawyers representing Zimmer did not return calls about the fee award. Nor did lawyers at Gibbons in Newark and at McAndrews, Held & Malloy in Chicago, who represented Howmedica. Representatives at Howmedica and at Zimmer also did not return calls about the case.

California Litigant Not Prevailing Party Based on Securing Undeserved Benefit

April 16, 2018

A recent Metropolitan News story, “Litigant Not Prevailing Party Based on Securing Undeserved Benefit,” reports that the Court of Appeal for this district held yesterday that a litigant cannot be deemed a prevailing party based on obtaining a benefit to which there is no entitlement.

Although the ruling came in a case brought under the Song-Beverly Consumer Warranty Act—state “Lemon Law,”—the reasoning would appear to have applicability to offers of compromise pursuant to Code of Civil Procedure §998.

Justice Brian Hoffstadt of Div. Two wrote the opinion. It affirms the decision of Los Angeles Superior Court Judge Mel Red Recana denying attorney fees to plaintiff Efigenia Garcia, but modifying the judgment to award $750 in costs.

The defendant was Mercedes-Benz USA, LLC. Prior to the lawsuit being filed, it agreed to purchase from Garcia, for $43,503.97, an automobile it manufactured and which she purchased.  A month after the purchase, the engine died.

However, the car-maker declined to pay Garcia the $3,090 she paid for dealer add-ons, and she sued. A confidential settlement was reached, leaving it to the court to determine attorney fees and costs, if any.

The statute provides for attorney fees for a prevailing plaintiff, and Garcia sought an award of $8,430 under that provision. Recana declined to make an award on the ground that the confidentiality of the settlement precluded a determination as to whether Garcia was any better off by virtue of having sued.

Hoffstadt noted that the act does not define “prevailing.” He said a “handful of courts” have applied Code of Civil Procedure §1032, which provides for costs to a party with “a net monetary recovery,” in determining if attorney fees are to be awarded.

In light of that statute, he said, Garcia is entitled to ordinary costs, but under the prevailing view—which he said is more “pragmatic” and preferable—the question in determining the attorney-fee question is the extent to which the litigation goals were achieved.

“Because Mercedes-Benz is not legally responsible to pay Garcia for the dealer add-ons,” Hoffstadt wrote, “Garcia’s success in getting Mercedes-Benz to pay more than the statute requires does not count as a cognizable litigation benefit.”  He explained:

“The trial court did not abuse its discretion in declining to find Garcia to be a prevailing party just because she pursued litigation to obtain the dealer add-ons from Mercedes-Benz. That is because she is not legally entitled, under the Act, to obtain a refund of those dealer add-ons from the manufacturer….Garcia purchased the add-ons from the dealer, not Mercedes-Benz. Except as to foodstuffs, a plaintiff seeking to recover for breach of an implied warranty of merchantability must prove privity with the breaching party….As to the dealer add-ons, Garcia’s privity is with the dealer—not Mercedes-Benz.”

The jurist pointed out that the act expressly provides that manufacturers are not obliged to make refunds for “nonmanufacturer items installed by a dealer” when the purchaser sues under an express warranty. He said that provision would be “nullified” if a plaintiff could skirt it by suing, as Garcia did, for breach of the implied warranty of merchantability.  He declared:

“[A] buyer is not a prevailing party under the Act just because she incurs attorney’s fees to obtain relief beyond that to which she is entitled. In such a case, the manufacturer or retail seller is paying more than it is legally required to pay just to end the litigation. Were the buyer who extracts such a ‘nuisance value’ as part of a settlement to be rewarded with attorney’s fees (by being declared a prevailing party), we would be acting in derogation of the true purpose of the Act’s attorney’s fees provision (which…is to remove the disincentive buyers might face when deciding whether to hire a lawyer to enforce their rights under the Act…as well as creating a perverse incentive for buyers to continue litigating in the hopes of obtaining a nuisance value that would entitle them to attorney’s fees as well.”  Hoffstadt commented:

“We are cognizant that our conclusion that a buyer is not a prevailing party under the Act’s attorney’s fees provision just because she convinces the manufacturer to pay for products and services supplied by the retail seller means that a buyer will not have a right to obtain a full refund for all outlay associated with her new defective car from a single party. And we recognize that a ‘one-stop’ remedy for buyers may make good sense, especially when the buyer in most cases purchased the car as part of a ‘one-stop’ shopping experience with the dealer. However, we are not free to disregard the Act’s plain language to implement what might be otherwise good public policy; that task lies solely with our Legislature.”

The case is Garcia v. Mercedes-Benz USA, LLC, 18 S.O.S. 1625.

New Florida Appellate Ruling Unpacks Nuances of Prevailing Party

April 5, 2018

A recent Daily Business Review story by Samantha Joseph, “In Fight for Attorney Fees ‘Prevailing Party’ Becomes Slippery Notion,” reports that foreclosure defense attorney Jeffrey H. Papell thought it was a done deal.  He’d convinced Miami-Dade Circuit Judge Monica Gordo to dismiss a bank’s case against homeowner Katherine Radosevich and had an order entitling him to attorney fees for that work.  But a new appellate court ruling unpacking the nuances of “prevailing party” means Papell will have to return to the trial court to fight for his fees.

The decision from the Third District Court of Appeal remanded the case to Gordo to determine whether Radosevich was really the winner, or had “substantially prevailed,” in light of a post-trial deal that gave the bank the litigation spoils.

The ruling turned on whether it was the homeowner or the bank who emerged victorious after Radosevich agreed to a short sale that left her with no home or proceeds.

“The appellate court is saying you can win the case on the merits, but if someone takes an appeal …. you’ve possibly lost your ability to collect fees,” Papell said.

Papell and his firm, Legal Save, represented Radosevich in a residential foreclosure suit by the Bank of New York Mellon.

The bank’s two-count complaint in June 2009 sought to foreclose on a promissory note and mortgage and reclaim a lost note. It included an attachment — a copy of an unendorsed note that listed Countrywide Home Loans Inc. as the lender, according to details in the appellate ruling.

More than a year later, the bank filed another copy of the original note — this time with documentation showing the bank had ownership of the loan prior to filing the suit. That filing included an undated blank endorsement that showed a July 21, 2009, assignment, but a May 19, 2009, effective date.

At trial, Papell challenged the credibility of a bank witness, who testified the lender lost the note. He turned the case in Radosevich’s favor by pointing out discrepancies in the two copies of the note and then succeeded on a motion for involuntary dismissal of the bank’s lawsuit.

The Bank of New York Mellon appealed to the Third DCA. While that challenge was pending, Papell filed to collect attorney fees and costs as the prevailing party under Section 57.105(7) of the Florida Statutes, and under a provision in the note and mortgage.

Before the appellate court decided the case, the bank and Radosevich agreed to sell the multimillion property through a short sale. Papell said he was not part of the arrangement, and never saw any agreement.

Karin L. Posser, N. Mark New II and William L. Grimsley of McGlinchey Stafford in Jacksonville represented the bank. They did not respond to requests for comment by press time.

The sale prompted the bank to dismiss its case before the Third DCA.

But that deal would later come back to haunt Radosevich’s lawyer, who now found the bank objecting to his fees.

The question for Gordo: Who prevailed? Was it the bank, which received about $1 million from the sale, or Radosevich, who got nothing?

Papell claimed victory.

“No matter how you slice this cake, my client won,” he said. “She was released from (debt of) $1.5 million, had the use of a multimillion-dollar home for seven years and paid no mortgage, no taxes, no insurance. … I think that’s a win.”

But the trial judge ruled for the bank.

“[BNY Mellon] received considerable proceeds in exchange for the satisfaction of the underlying mortgage and note, and Radosevich lost her home and received no proceeds from the sale,” the trial court found.

But the Third DCA called for a deeper analysis, reversing the lower court and remanding the case for an evidentiary hearing.

“While we hold that the trial court had the authority to reconsider its earlier entitlement order, and to consider whether actions and events occurring during the pendency of the prior appeal affected that earlier determination, the fact remains that the court must make such a determination based upon the record before it,” Judge Kevin Emas wrote in a unanimous decision with Judges Ivan F. Fernandez and Robert J. Luck. “In this case, the record was simply inadequate for the trial court to make such a determination.”

Delaware Governor Seeks Fee Reduction in State Court Party Balance Case

January 12, 2018

A recent Delaware Law Weekly story by Tom McParland, “Carney Asks for Fee Reduction in Case Striking State Court Party Balance Mandate” reports that attorneys for Governor John Carney are asking a federal judge in Wilmington to slash a request for attorney fees in the case of a New Castle County lawyer who successfully challenged a provision of the Delaware Constitution requiring political balance on the state’s courts.

Carney, who has appealed the decision said that a ruling on James R. Adams’ fee request should be tabled until the U.S. Court of Appeals for the Third Circuit can weigh in.  But the governor also argued that any award the court grants should be reduced by 40 percent because Adams had only achieved partial success.

Adams, who is represented by Finger & Slanina partner David L. Finger, last month requested $22,900 to cover the cost of litigating the case through summary judgment.  U.S. Chief Magistrate Judge Mary Pat Thynge of the District of Delaware on Dec. 6, 2017, ruled in favor of Adams, a graduate of Widener University Delaware Law School, who argued the 120-year-old requirement violated the First Amendment of the U.S. Constitution by restricting government employment based on party affiliation.

Carney, who is responsible for nominating judges, did not dispute that Adams had prevailed in the case.  However, Carney challenged Adams’ assertion that he had secured a “complete victory,” saying that Thynge’s ruling did not specifically address constitutional provisions preventing one political party from being represented by more than a “bare majority” of the judges on Delaware’s courts.

“Because plaintiff did not achieve success in challenging the constitutional provisions relating to the Family Court and the Court of Common Pleas, or in challenging the bare majority provisions for the Delaware Supreme Court, the Superior Court or the Court of Chancery, defendant requests a 40 percent reduction in any award the court may choose to grant, as such a reduction would reflect plaintiff’s partial success in challenging Delaware’s constitutional provisions governing the composition of its courts” Carney’s Young Conaway Stargatt & Taylor attorneys wrote in an 8-page brief.

Finger, meanwhile, said in an interview that reduction of attorney fees was not warranted in any case where a plaintiff has won “substantial” relief from the court.  “We won a very substantial issue,” he said. “Moreover, the issue [of party balance] will apply to Family Court and the Court of Common Pleas because the bare majority requirement still requires making political party a determining factor [in nominating judges],” Finger said.

Adams, a registered independent, said he’s been prevented in the past from applying for judgeships because of the constitutional mandate that judicial seats be split between Republicans and Democrats.

Proponents of the provision—codified in Article IV, Section 3 of the state constitution—have said it safeguards a fair, independent and impartial judiciary that attracts talent to serve in its ranks.  But Adams and others have argued the mandate improperly boxes out independents and creates the impression the state’s judiciary is tinged with political bias.

Fee Request Denied Because Neither Party Prevailed

January 9, 2018

A recent Delaware Business Court Insider by Tom McParland, “Seven-Figure Fee Request Crumble as Bouchard Calls Cookie Contract Case a Draw” reports that the Delaware Court of Chancery denied multimillion-dollar requests for attorney fees from Mrs. Fields Brand Inc. and Interbake Foods, ruling that neither party had prevailed in a dispute over a contract to sell Mrs. Fields cookies in grocery and convenience stores.

Chancellor Andre G. Bouchard said the baked-goods companies had fought to a draw on the two main issues of a 2016 trial, where Interbake argued that it could exit a five-year licensing agreement to sell Mrs. Fields’ products.

In June, Bouchard ruled in favor of Mrs. Fields, saying that Interbake could not rely on its “material adverse change” argument to escape the deal.  But he also rejected Mrs. Fields’ “astounding” claim for $28.7 million in damages in the case.

Both sides later moved for attorney fees under a provision of the contract that required the “prevailing” party to be reimbursed for costs and expenses of litigation stemming from the licensing agreement.  Interbake asked for $2.6 million, and Mrs. Fields requested $5.3 million for its efforts.

In an 11-page letter opinion, Bouchard said Interbake’s attempts to validate its exit from the agreement spawned a slew of related legal questions, which accounted for the bulk of his 108-page ruling in June.  But he also noted that Mrs. Fields made its losing push for money damages a “central focus” of its litigation strategy, despite a standstill agreement that ensured the licensing agreement would remain in place throughout the case.

“In sum, because each side both won and lost on one of the two equally core issues in this case, I hold that neither Mrs. Fields nor Interbake predominated in the litigation and thus neither is entitled to an award of attorneys’ fees or expenses as the ‘prevailing party’ under [the licensing agreement],” the chancellor wrote.