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Fifth Circuit: Former Employee Owes $2.3M in Attorney Fees

September 4, 2020 | Posted in : Billing Record / Entries, Fee Dispute, Fee Doctrine / Fee Theory, Fee Entitlement / Recoverability, Fee Issues on Appeal, Fee Request, Hours Billled

A recent Law 360 story by Clark Mindock, “5th Circ. Rules Ex-Stryker Worker Owes Co. $2.3M in Atty Fees,” reports that a former Stryker Corp. employee can't ditch his obligation to pay nearly $2.3 million in attorney fees after a seven-year "scorched-earth" legal fight over his alleged trade secrets theft, the Fifth Circuit ruled.  In a published opinion, a three-judge panel affirmed that Christopher Ridgeway owes Stryker millions in legal fees despite his argument that many of the company's costs were unrelated to its claims he stole trade secrets when he moved to a competing medical device company in 2013.

Ridgeway, who filed for bankruptcy after a judgment against him, repeatedly wasted the bankruptcy court's time by failing to comply with a court order to comb through a list of billed hours to identify what he thought he shouldn't have to pay, the panel said.  And it found "frivolous" his argument that only juries can award attorney fees in his type of trade secret case, saying statutes are clear that a judge may make those calls.

The panel disregarded Ridgeway's argument that he somehow complied with the bankruptcy court's orders even though he didn't provide a fee breakdown.  It said he repeatedly and intentionally failed to learn from the mistake despite clear direction from the court.  "It's a time-consuming activity, and it's certainly not fun.  But a party's unwillingness to engage in unglamorous work does not make that work impossible," the circuit said of the order to go through the attorney fees.

Stryker accused Ridgeway, a former district sales manager at the company, of an "ill-conceived and long-planned scheme" to steal trade secrets when he transferred to a new company after nearly 12 years, according to the original complaint.  A Michigan federal court found Ridgeway had breached his contractual obligation, breached his fiduciary duty and violated Michigan's Uniform Trade Secrets Act when he left Stryker to join a competing medical equipment company and brought along business secrets with him.

In court, Stryker argued that Ridgeway should pay for all of the attorney fees related to the case by virtue of the so-called Common Core doctrine that entitles fees for claims that are related to the MUTSA claim.  Stryker sued Ridgeway in 2013, leading to a judgment on March 23, 2016, by the Michigan district court.  The court at that time gave Stryker 14 days to request attorney fees.

But Ridgeway filed for bankruptcy in Louisiana on the last day of that 14-day period, staying the Michigan proceedings and prohibiting Stryker from making the fee request there, according to court documents.  So, Stryker then filed a proof of claim for $2.27 million in fees in the Louisiana court.

While considering whether to force Ridgeway to pay up for attorney fees that stemmed from non-MUTSA claims, the court ordered him to provide a detailed list of which attorney fees provided by Stryker were acceptable or not with three distinct categories just in case the Common Core doctrine was decided not to be applicable in the case.  Ridgeway never provided that list, though, and instead repeatedly insisted that he complied with the order when even the court told him he had not, according to the Fifth Circuit ruling.