LCS Grp. LLC v. Shire LLC

383 F.Supp.3d 274

LCS GROUP LLC, Plaintiff,

v.SHIRE LLC, ET AL., Defendant.

1:18-cv-02688 (AT) (SDA)

United States District Court, S.D. New York.

Signed May 29, 2019

Stephen Michael Lobbin, SML Avvocati P.C., La Jolla, CA, for Plaintiff.

Stephen M Lobbin, PRO SE.

Porter F. Fleming, Haug Partners LLP, Tracy Lynn Cole, Victoria Lynn Stork, Baker & Hostetler, LLP, New York, NY, for Defendants.

OPINION AND ORDER

STEWART D. AARON, United States Magistrate Judge:

Before the Court is a motion by Defendants Shire LLC, Shire Development LLC, Shire PLC¹ and Haug Partners LLP ("Haug Partners") (collectively, the "Defendants") for attorneys' fees to be awarded in the amount of $ 250,000. (ECF No. 80.) For the reasons set forth below, Defendants' motion is GRANTED IN PART and DENIED IN PART.

BACKGROUND

Shire is a pharmaceutical company that manufactures and sells Vyvanse, a drug used for the treatment of Attention-Deficit/Hyperactivity Disorder. LCS Grp., LLC v. Shire LLC , No. 18-CV-2688 (AT), 2019 WL 1234848, at *1 (S.D.N.Y. Mar. 8, 2019). Non-party Dr. Louis Sanfilippo, the sole member of LCS Group LLC, invented U.S. Patent 8,318,813 ("'813 Patent"), which relates to methods for the treatment of Binge Eating Disorder with the drug lisdexamfetamine dimesylate (e.g. , Vyvanse ). Id. The '813 Patent was issued by the United States Patent and Trademark Office ("USPTO") in November 2012. Id. LCS owned the '813 Patent from issuance to 2015. Id. This dispute arises out of Shire's initiation of an inter partes review ("IPR") proceeding before the USPTO, challenging and ultimately cancelling all claims of the '813 Patent on June 4, 2015. Id. at *2. LCS had claimed that Shire's IPR petition "relied exclusively on a fraudulent declaration" prepared by Shire and Shire's counsel, Haug Partners, and signed by Timothy Brewerton, M.D., Shire's expert witness in the IPR proceeding. Id.

On January 20, 2017, Dr. Sanfilippo filed a pro se lawsuit in the United States District Court for the District of South Carolina against Dr. Brewerton, asserting state law claims for fraud, defamation and negligence, and alleging that the declaration in support of the IPR petition contained fraudulent misrepresentations in concluding that the claims of the '813 Patent were invalid. Id. On November 20, 2017, District Judge Richard Gergel dismissed Dr. Sanfilippo's complaint in its entirety, finding that Dr. Sanfilippo was "engaging in an ongoing, abusive use of legal process," and further that "he engaged in improper behavior." Sanfilippo v. Brewerton , No. 17-CV-00183 (RMG), 2017 WL 5591615, at *3 (D.S.C. Nov. 20, 2017).

On March 27, 2018, Stephen Michael Lobbin ("Lobbin"), then a partner at Foundation Law Group ("Foundation"), as attorney for LCS, filed the instant lawsuit against Shire arising from the same set of circumstances that were asserted in the District of South Carolina. (Compl., ECF No. 1.) On June 26, 2018, Lobbin filed a First Amended Complaint, adding as defendants law firms Haug Partners and Baker Hostetler LLP (LCS's prior law firm that had withdrawn during the course of the IPR proceeding), and asserting a civil RICO claim. (Am. Compl., ECF No. 27.)

On July 26, 2018, Defendants filed a motion to dismiss the First Amended Complaint. (Not. of Motion to Dismiss, ECF No. 38.) On September 7, 2018, Defendants filed a motion, pursuant to Federal Rule of Civil Procedure 11(c), seeking sanctions against LCS, Lobbin and Foundation. (Not. of Motion for Sanctions, ECF No. 47.)

By Order dated March 8, 2019, District Judge Analisa Torres dismissed all claims against the Defendants with prejudice and granted Defendants' motion for sanctions. See LCS Grp., LLC , 2019 WL 1234848, at *18. Judge Torres ordered LCS, Lobbin and Foundation "jointly and severally, to reimburse [Defendants] for their reasonable attorney's fees and other expenses associated with briefing the motion to dismiss and the motion for sanctions." Id. at **13, 18. Judge Torres instructed Defendants to file a motion for attorneys' fees if the parties were unable to reach agreement as to the amount to be paid by LCS, Lobbin and Foundation. Id. at *18.

On April 5, 2019, Defendants filed their motion for attorneys' fees and supporting papers.² (ECF Nos. 80-82.) In their motion, Defendants are seeking $ 250,000 in legal fees, but are not seeking any other expenses. (Defs.' Mem., ECF No. 81, at 6.) Among the papers submitted by Defendants were billing invoices for Haug Partners that contained certain redactions. (See Fleming Decl., Ex. 1, ECF No. 82-1.) Defendants' non-dispositive motion for attorneys' fees was referred to me on April 11, 2019. (Order of Reference, ECF No. 84.)

Lobbin filed opposition papers on April 19, 2019.³ (Opp., ECF No. 85.) Lobbin argues that $ 15,000 would be an appropriate sanctions award. (Opp. at 3.) Lobbin's opposition papers included redacted copies of certain of his federal tax returns. (See Opp., Ex. A, ECF No. 85-2.) Although Foundation itself did not file an opposition, Lobbin's opposition papers included a Declaration in opposition from Gregg D. Zucker of Foundation, arguing that Foundation should not be responsible for any of Defendants' attorneys' fees. (Zucker Decl., ECF No. 85-5.) In a letter dated April 19, 2019, Lobbin requested oral argument (4/19/19 Ltr., ECF No. 86), which I granted and scheduled to take place on May 28, 2019. (4/22/19 Endorsement, ECF No. 87.)

By Order dated May 21, 2019, I directed Lobbin to certify that he had advised LCS of the May 28 oral argument date and of LCS's right to appear at the argument in person or by telephone. (5/21/19 Order, ECF No. 88.) Such certification was provided by Lobbin by Declaration dated May 23, 2019.⁴ In my May 21 Order, I also directed Defendants to supply to the Court for its in camera review copies of its billing invoices that were not redacted. (See 5/21/19 Order.) Such unredacted invoices timely were supplied to the Court, and shall be filed with the Clerk of Court under seal. (See 5/29/19 Order, ECF No. 91.) Finally, in my May 21 Order, I directed Lobbin to supply to the Court copies of his tax returns that were not redacted. (See 5/21/19 Order.) Such unredacted tax returns timely were supplied to the Court, and shall be filed with the Clerk of Court under seal. (5/29/19 Order.)

Oral argument was held on May 28, 2019, at which Defendants' counsel and Lobbin appeared. Dr. Sanfilippo appeared in person and testified regarding LCS's financial condition. No one appeared on behalf of Foundation.⁵

DISCUSSION

I. Legal Standards

Judge Torres' Order directed the payment by LCS, Lobbin and Foundation of Defendants' "reasonable attorney's fees and expenses." See LCS Grp., LLC , 2019 WL 1234848, at **13, 18. The Court "enjoys broad discretion in determining the amount of a fee award." Vincent v. Comm'r of Soc. Sec. , 651 F.3d 299, 307 (2d Cir. 2011). In order to determine reasonable attorneys' fees in this case, the Court first will consider the lodestar approach to establish a "presumptively reasonable fee" by calculating the number of hours reasonably expended by counsel on the litigation and multiplying that number of hours by reasonable hourly rates. See Millea v. Metro-North R.R. Co. , 658 F.3d 154, 166 (2d Cir. 2011) (internal quotation marks omitted).

To determine the reasonable hourly rate, the Court's analysis is guided by the market rate "prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation." Blum v. Stenson , 465 U.S. 886, 895 n.11, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984). Generally, the relevant community is the district in which the district court sits. Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany , 522 F.3d 182, 190 (2d Cir. 2008). The Court is to evaluate the "evidence proffered by the parties" and may take "judicial notice of the rates awarded in prior cases and the court's own familiarity with the rates prevailing in the district." Farbotko v. Clinton County of N.Y. , 433 F.3d 204, 209 (2d Cir. 2005).

In making its determination, the Court "examines the particular hours expended by counsel with a view to the value of the work product of the specific expenditures to the client's case." Luciano v. Olsten Corp. , 109 F.3d 111, 116 (2d Cir. 1997). A court-awarded attorneys' fee must compensate only for "hours reasonably expended on the litigation," not for "hours that are excessive, redundant, or otherwise unnecessary." Hensley v. Eckerhart , 461 U.S. 424, 433-34, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). If the number of hours recorded by counsel is disproportionate to the work performed, the Court should reduce the stated hours in making its fee award. See id. at 433, 103 S.Ct. 1933.

In addition, "[i]n awarding attorney's fees as a sanction, the Second Circuit has cautioned that a court should consider the financial circumstances of the sanctioned party." Bowler v. U.S. I.N.S. , 901 F.Supp. 597, 606 (S.D.N.Y. 1995) (citing Sassower v. Field , 973 F.2d 75, 81 (2d Cir. 1992), cert. denied , 507 U.S. 1043, 113 S.Ct. 1879, 123 L.Ed.2d 497 (1993) ); see also Mantell v. Chassman , 512 Fed. App'x 21, 24 (2d Cir. 2013) (district court "erred by failing to consider [the sanctioned attorney's] financial hardship argument in calculating an appropriate sanction.").

Finally, the determination of fees "should not result in a second major litigation." Hensley , 461 U.S. at 437, 103 S.Ct. 1933. Indeed, "trial courts need not, and indeed should not, become green-eyeshade accountants. The essential goal in shifting fees (to either party) is to do rough justice, not to achieve auditing perfection. So trial courts may take into account their overall sense of a suit, and may use estimates in calculating and allocating an attorney's time." Fox v. Vice , 563 U.S. 826, 838, 131 S.Ct. 2205, 180 L.Ed.2d 45 (2011).

II. Application

The Court carefully has reviewed Defendants' motion, together with their counsel's time records, as well as...