Universal Elecs., Inc. v. Universal Remote Control, Inc., CASE NO. SACV 12–00329 AG (JPRx)

130 F.Supp.3d 1331

Universal Electronics, Inc., Plaintiff,

v.Universal Remote Control, Inc., Defendant.

CASE NO. SACV 12–00329 AG (JPRx)

United States District Court, C.D. California.

Signed September 4, 2015

Mark A. Finkelstein, Jones Day, William C. Rooklidge, Gibson, Dunn & Crutcher LLP, Irvine, CA, Anna R. Buono, Martin L. Fineman, Nicolas A. Jampol, Davis Wright Tremaine LLP, Los Angeles, CA, Ashley E. LaValley, Lee Sheikh Megley & Haan, Christopher J. Lee, Pro Hac Vice, Frederick C. Laney, Pro Hac Vice, Raymond P. Niro, Sr., Pro Hac Vice, Niro Haller and Niro Ltd., Chicago, IL, David B. Cochran, Theodore M. Grossman, Pro Hac Vice, Thomas R. Goots, Pro Hac Vice, Jones Day, Cleveland, OH, for Plaintiff.

Brian E. Haan, Pro Hac Vice, Laura A. Kenneally, Pro Hac Vice, Niro Haller and Niro Ltd., Chicago, IL, for Plaintiff and Defendant.

Brian K. Brookey, Tucker Ellis LLP, Clarence Andrew Rowland, Theodore W. Chandler, Sidley Austin LLP, Steven Erick Lauridsen, Tucker Ellis LLP, Los Angeles, CA, Keith J. Barkaus, Pro Hac Vice, Douglas A. Miro, Pro Hac Vice, Martin Pfeffer, Pro Hac Vice, Michael F. Hurley, Pro Hac Vice, Ostrolenk Faber LLP, New York, NY, Peter H. Kang, Sidley Austin LLP, Palo Alto, CA, Samuel R. Miller, Cynthia A. Chi, Sidley Austin LLP, Teague I. Donahey, Skjerven Morrill, San Francisco, CA, for Defendant.

ORDER SETTING AWARD OF FEES AND EXPENSES, INCLUDING TAXABLE COSTS TO DEFENDANT

Andrew J. Guilford, United States District Judge

The Court has held that Defendant Universal Remote Control, Inc. ("Defendant" or "URC") is entitled to attorney fees under 35 U.S.C. section 285, as recently interpreted by the Supreme Court in Octane Fitness, LLC v. Icon Health & Fitness, Inc., ––– U.S. ––––, 134 S.Ct. 1749, 188 L.Ed.2d 816 (2014). In Octane, the Supreme Court eased the requirements to get such fees under section 285. Now the Court must calculate the amount of fees to be awarded. The Court's Order also now calculates appropriate expenses, including whether expert fees are recoverable here. Very voluminous documentation, including supplementation and objections, have been submitted by Defendant and Plaintiff Universal Electronics, Inc. ("Plaintiff" or "UEI").

The calculations and the issues thus presented underscore uncertainty about how to determine attorney fees under section 285. The Court begins with a global fee analysis that it concludes properly balances all interests, and then it engages in a more granular analysis that likely consumes time and resources unnecessarily.

GLOBAL FEE ANALYSIS

Some have become concerned about wasted effort focused on the recovery of fees under section 285. The calculation of actual fees awarded are a significant part of the time and energy dedicated to section 285motions.

Authorities vary on how to establish attorney fees in the different areas where fees are recoverable. These include fees under a contract clause, see, e.g.,Becker v. Wells Fargo Bank, N.A., 2014 WL 7409447 at *6, 2014 U.S. Dist. LEXIS 178462 at *20 (E.D.Cal. Dec. 29, 2014)("The starting point for determining reasonable attorneys' fees under Section 1717 is the 'lodestar.' "); the recovery of fees in some class action settlements under a common fund theory, see, e.g.,Staton v. Boeing Co., 327 F.3d 938, 967–68 (9th Cir.2003)("As in a statutory fee-shifting case, a district court in a common fund case can apply the lodestar method to determine the amount of attorneys' fees.... Alternatively, in a common fund case, the district court can determine the amount of attorneys' fees to be drawn from the fund by employing a 'percentage' method."); Resnick v. Frank (In re Online DVD–Rental Antitrust Litig. ), 779 F.3d 934, 949 (9th Cir.2015)("The district court did not err in approving the fee award. Plaintiffs' class counsel asked for attorneys' fees in the amount of 25% of the overall settlement fund of $27,250,000 and the district court granted class counsels' request."); and the recovery of fees in a case under 28 U.S.C. section 1983, see, e.g.,McCown v. City of Fontana, 711 F.Supp.2d 1067, 1072 (C.D.Cal.2010)(stating that "[o]verall, considering all that it observed in this case, this Court makes an equitable finding that the legal services provided that support recoverable fees should be reasonably valued at $150,000," and then awarding $148,250 under the traditional mathematical lodestar analysis) (Guilford, J.), aff'd, 2011 WL 6778482, 2011 U.S.App. LEXIS 25841 (9th Cir. Dec. 27, 2011). Of course, different factors are involved in the different areas where fees can be recovered, and they raise various issues. A victorious 1983 plaintiff may be enforcing important constitutional principles, while a fee award in a class action common fund situation may be enforcing statutory regulations. One purpose of section 285is to deter bad faith litigation by imposing the cost of a bad decision on the decision-maker.

There is a growing trend that District Court judges should award fees based on an overall global understanding and review of a case, rather than on a tedious review of voluminous time entries and hourly rates. Former Supreme Court Justice Sandra Day O'Connor, sitting by designation, has emphasized the overall equitable nature of fee analysis. She has written that "[t]he net result of fee-setting jurisprudence ... is that the district courts must engage in an equitable inquiry of varying methodology while making a pretense of mathematical precision." Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cty. of Albany, 522 F.3d 182, 189 (2d Cir.2007)(O'Connor, J., sitting by designation, joining in the opinion) (citation omitted). Justice Elena Kagan has echoed these sentiments in Fox v. Vice .

[T]rial 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. And appellate courts must give substantial deference to these determinations, in light of "the district court's superior understanding of the litigation."

Fox v. Vice, 563 U.S. 826, 131 S.Ct. 2205, 2216, 180 L.Ed.2d 45 (2011).

The statements of Justices O'Connor and Kagan reflect what is happening in the legal profession as hourly billing has become increasingly unpopular and clients prefer to look at aggregate, global numbers.

As noted, and reflecting the modern trend described by two Supreme Court Justices, this Court will begin by generally reviewing this case to determine a reasonable aggregate global amount for fees. After all, this Court has dealt with this case and the attorneys involved for a significant time, has an overall sense of the suit, and has the experience to determine a reasonable fee in the context of this litigation.

Defendant requests approximately $4.6 million in fees, having already made an attempt to apportion the requested fees under the Court's Order. And, in response to the Court's concern that this case has been over-litigated, Defendant has omitted certain items from its request. Yet, given the Court's intimate familiarity with this case over its three-year course, the Court is left with the firm impression that the submitted fees, while reflecting adequate work that led to a favorable outcome for Defendant, also reflect the inefficiency of too many lawyers and not enough focus. Too often, the proper goal of a litigator to bring order out of chaos was lost, with more chaos resulting.

So, from a global, overall review, and taking into account the significant apportionment Defendant has already undertaken at the Court's direction, the Court imposes a further discount on the fees sought of around 10%, for a total award of $4.1 million, rounded. In light of all the circumstances and the Court's superior understanding of the litigation, this is the proper amount. It certainly reflects the "rough justice" that Justice Kagan says should be sought. Fox, 131 S.Ct. at 2216. While this is a relatively large number for an award that only covers certain patents and issues in the case, it is appropriate given the amount at stake, the complexity of the issues, and the fact that the resolution of certain issues reflected significant difficulties unnecessarily caused by Plaintiff. The Court has determined, for example, that "this litigation was at least in part motivated by Plaintiff's desire for 'payback' for Defendant's successful competition in the marketplace," that Plaintiff failed to adequately review its own material concerning marking before filing suit, that it engaged in discovery gamesmanship to obscure such failing, and that Plaintiff engaged in "troubling" conduct concerning a petition for correction of inventorship.

Those concerns were addressed in the Court's Order determining that a partial grant of fees would be appropriate here. With the careful apportionment already performed by the Court and Defendant, the global, overall review just recited ought to suffice. Rough justice has been done. But to provide further detail, the Court now turns to a more granular analysis.

GRANULAR FEE ANALYSIS

The Court ruled that Defendant was entitled to fees for the portions of the case that were attributable to the '426 and '067 Patents and the motion for reconsideration regarding the '367 Patent. Accordingly, Defendant has apportioned its fees, and seeks reimbursement of only portions of the fees. Plaintiff does not contest that apportionment, but does contest other aspects of the fees, as well as Defendant's expense request.

Defendant requests $4,661,341.55 in attorney fees and $860,911.50 in expenses, totaling $5,522,253.04. That amount excludes $250,949.03 that Defendant omitted to avoid disputes. Plaintiff objects that certain billing rates are too high, that Defendant intentionally handled the case inefficiently, that certain expenses are not awardable under section 285, and...