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Malem Medical, Ltd. v. Theos Medical Systems, Inc.

United States District Court, N.D. California

November 7, 2017

MALEM MEDICAL, LTD., et al., Plaintiffs,
v.
THEOS MEDICAL SYSTEMS, INC., et al., Defendants.

          ORDER GRANTING IN PART PLAINTIFFS' MOTION FOR ATTORNEYS' FEES AND COSTS DOCKET NO. 143

          EDWARD M. CHEN, UNITED STATES DISTRICT JUDGE.

         On March 8, 2017, Plaintiffs Malem Medical, LTD. et al. filed a motion for Order to Show Cause asking the court to hold Defendants, Theos Medical Systems, Inc. et al., in contempt. See Docket No. 84. On August 10, 2017, this Court issued an order finding the Defendants in civil contempt for making disparaging statements to various regulatory agencies. See Docket No. 132. Subsequently, Plaintiffs filed a motion for $156, 169.00 in attorney fees and costs incurred by Plaintiffs in pursuing the motion for contempt. See Docket No. 143 (“Motion”). Because some of the time entries submitted by Plaintiffs' attorneys are duplicative, irrelevant, or vague, and because $156, 169.00 is excessive considering the limited amount of actual court filings, the Court applies a 25 percent discount to Plaintiffs' requested amount, which results in $117, 126.75, and GRANTS IN PART the motion for attorneys' fees and costs.

         I. BACKGROUND

         On July 14, 2015, this Court signed a Consent Decree and Order providing injunctive relief to Plaintiffs, the enforcement of which this Court retained jurisdiction. See Docket No. 83 (“Consent Decree”). The Consent Decree required that Defendants not disparage Plaintiffs or any of their products. Consent Decree ¶ 9. Plaintiffs and Defendants also entered into a Settlement Agreement which stipulated that the prevailing party or parties in an action relating to the enforcement of the Agreement or the Consent Decree shall be entitled to recover their reasonable attorney fees and costs. See Docket No. 85-1 (“Settlement Agreement”) at 9. In 2016, Plaintiffs were subject to a FDA inquiry based on 85 MedWatch complaints received by the FDA beginning in Fall 2015. See Motion at 3. Plaintiffs believed that Defendants were responsible for falsely filing those complaints to FDA and four other governmental agencies. Id. Around the same time, a number of suspicious reviews of Malem products also started to appear on Amazon. Id. The complaints and the Amazon reviews contained substantially similar language. Motion at 4. Thus, Plaintiffs also believed that Defendants were responsible for those Amazon reviews. Id. Plaintiffs' attorneys started preparing for the motion for contempt one year before filing. See Docket Nos. 144-2, 145-2.

         On March 8, 2017, Plaintiffs filed a Motion for Order to Show Cause, asking the Court to hold Defendants in contempt for filing false complaints to five governmental agencies in violation of the Consent Decree. See Docket No. 84. On April 2, Plaintiffs filed a second motion to reopen discovery to determine if Defendants had violated the Consent Decree by posting disparaging comments on Amazon. See Docket No. 89. On April 13, Defendants filed an opposition denying that the complaints to government agencies and the Amazon reviews were made by or attributable to the Defendants. See Docket No. 99. On July 31, a bench trial was held and three witnesses testified. Plaintiffs did not present any evidence regarding the Amazon reviews. See Opposition, Exh. A. On August 10, this Court issued an order finding the Defendants in civil contempt for making disparaging statements to various regulatory agencies. See Docket 132 (“Order”).

         In preparing for the contempt proceeding, Plaintiffs hired two attorneys, Mr. Levin and Mr. Craigie, to represent them. Mr. Craigie, as the lead attorney, was mainly responsible for contacting clients, appearing before the court, and taking depositions. He seeks $94, 155.00 for 210.70 hours of work with a $450 hourly rate for the contempt proceeding. See Docket No. 145 ¶ 5. Mr. Levin was responsible for researching and drafting the pleadings. He claims $39, 390.00 for 98.45 hours of work with a $400 hourly rate for the contempt proceeding. See Docket No. 144 ¶ 6. Mr. Levin also hired a personal investigator, Mr. Hodgson, to investigate those reports and reviews and locate possible witnesses, which resulted in $4, 079.50 in fees. Id. ¶ 8. Plaintiffs also incurred $3, 029.60 in costs related to the contempt proceeding. Motion at 4. In addition, Mr. Craigie spent 17 hours working on the motion for fees, and Plaintiffs requested an additional award of attorneys' fees in the amount of $7, 650.00. See Docket No. 153 ¶ 6. In total, Plaintiffs seek $156, 169.00 in attorneys' fees and costs. See Docket No. 151 at 6.

         II. LEGAL STANDARD

         Attorneys' fees are available to a party where specifically authorized by a contract. Int'l Union of Petroleum & Indus. Workers v. W. Indus. Maintenance, Inc., 707 F.2d 425, 428 (9th Cir. 1983). Attorney's fees can also be awarded as compensatory damage to the prevailing party in a civil contempt motion within the discretion of the district court. Perry v. O'Donnell, 759 F.2d 702, 705 (9th Cir. 1985).

         Reasonable attorneys' fees are generally calculated using the lodestar method, whereby the court multiplies a reasonable number of hours worked by a reasonable hourly rate. Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 546 (2010). The fee applicant bears the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates. See Gates v. Deukmejian, 987 F.2d 1392, 1397 (9th Cir. 1992). “Those hours may be reduced by the court where documentation of the hours is inadequate; if the case was overstaffed and hours are duplicated; [or] if the hours expended are deemed excessive or otherwise unnecessary.” Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986). It is within the district court's discretion to deal with these problematic entries. For example, the district court can apply a reduction rate to duplicative hours. However, if the reduction is more than 10%, the court must give a “specific explanation.” See Moreno v. City of Sacramento, 534 F.3d 1106, 1112 (9th Cir. 2008).[1]

         III. ANALYSIS

         The Court finds that Plaintiffs should recover reasonable attorneys' fees and costs based on the Settlement Agreement as well as the Court's inherent power. The Court also finds the attorneys' rates are reasonable. However, some of the claimed hours are unreasonable for the following reasons.

         A. Problematic Time Entries

         1. Duplicative and Excessive Hours

         Mr. Craigie billed a significant amount of time for reviewing Mr. Levin's drafts and other documents. See, e.g., Docket No. 145, entry for 1/27/2017 (time spent on reviewing a letter to the FDA). As Mr. Craigie and Mr. Levin are of ...


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