Check Your Junk Mail

Posted on August 4, 2019 by Steven Callahan

A lot of things in the practice of law are fixable. Miss responding to requests for production or interrogatories by a couple of days? Not good, but in the end, probably no big deal. But miss filing a notice of appeal? Big deal.

In Atamian v. University of Texas (available here), the plaintiff’s motion for new trial was denied on May 10, 2018, and the plaintiff failed to timely file a notice of appeal. The plaintiff filed a “Motion for Leave to File Notice of Appeal” that asserted “excusable neglect” for the plaintiff’s failure to timely file the notice of appeal. The plaintiff “asserted that, although notice of the new trial motion’s denial was properly sent to the email provided to the district court and received by his lawyer’s firm, when it was internally forwarded to the lawyer himself, it landed in ‘junk mail,’ and was therefore overlooked.” The district court denied the motion, refusing to find excusable neglect, and the plaintiff appealed that decision. The Fifth Circuit concluded that the plaintiff failed to show reversible error (on the denial of the motion for leave to file a late appeal), affirmed the district court’s order, and dismissed the remainder of appeal for want of jurisdiction.

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Client: “The Defendants Owe Me a Bunch of Money. Let’s File Suit and Freeze Their Assets” Attorney: “That’s Not the Way It Typically Works”

Posted on July 21, 2019 by Steven Callahan

On April 12, 2019, the Fifth District Court of Appeals issued its decision in RWI Construction v. Comerica Bank (available here). The trial court granted Comerica Bank’s request for a temporary injunction enjoining defendants from dissipating certain funds that had been deposited into a bank account. The court of appeals affirmed in part and reversed in part.

The general rule is as follows:

“[A] trial court is forbidden to issue a preliminary injunction freezing a defendant’s assets simply to assure future satisfaction of a subsequent judgment[.]” See also De Beers Consol. Mines v. United States, 325 U.S. 212, 222-23 (1945) (plaintiff may not “apply to the chancellor for a so-called injunction sequestrating his opponent’s assets pending recovery and satisfaction of a judgment in such a law action. No relief of this character has been thought justified in the long history of equity jurisprudence.”).

But this “general rule would not control where there is a logical and justifiable connection between the claims alleged and the acts sought to be enjoined, or where the plaintiff claims a specific contractual or equitable interest in the assets it seeks to freeze.”

Here, $800,000 of the funds at issue were collateral for the loan at issue in the case. Rather than pay those funds over to Comerica Bank as required upon their receipt, they were transferred from defendant to its owner (Lone Star). “Accordingly, the evidence presented by Comerica Bank traced collateral for the loan to Lone Star, and those funds are both logically and justifiably connected to Comerica Bank’s breach of contract claim and the relief it seeks in this case. Thus, an exception to the general rule prohibiting the freezing of assets pre-judgment exists as to the $800,000 transferred to Lone Star.”

(Another exception to the general rule against freezing assets is where the assets at issue are the subject of a security interest in the plaintiff’s favor.)

With respect to freezing the $800,000 in collateral, the court held that the plaintiff need not demonstrate that the defendant was insolvent. An “unwillingness to pay is just as significant, and perhaps more so, as an inability to pay.”

Because the remainder of the funds were the product of a general capital call on the partners of Lone Star, an injunction could not issue as to those funds, as a pretrial freeze of funds is not available to “assure their future availability to satisfy a judgment based solely on concerns about [a defendant’s] general future liquidity.” 

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Federal Circuit Upholds District Court’s Vacating Of Judgment In View Of Later Decision Invalidating Patent

Posted on July 21, 2019 by Steven Callahan

On February 1, 2019, the Federal Circuit issued its decision (available here) in Prism Technologies v. Sprint Spectrum. The case raises the question of what happens where: (i) a plaintiff obtains a jury verdict/judgment that is affirmed on appeal at the Federal Circuit and then (ii) the patent is invalidated in a subsequent appeal at the Federal Circuit in a different case.

Two possible outcomes seem possible—either (i) the defendant has to pay the amounts awarded in the judgment because the judgment was affirmed on appeal before the patent’s invalidation was affirmed on appeal; or (ii) the defendant doesn’t have to pay because, before the plaintiff could execute on the judgment, the plaintiff’s patent was invalidated on appeal.

In Prism, the Federal Circuit held that the district court didn’t abuse its discretion when it used the later invalidation ruling to set aside the earlier judgment.

The facts of Prism were as follows:  

  1. Prism obtained a $30 million judgment against Sprint for infringement of two patents; the Federal Circuit affirmed the judgment in March 2017; and the Supreme Court denied Sprint’s cert. petition in November 2017.
  2. Before the Supreme Court denied Sprint’s cert. petition, the Federal Circuit invalidated the patents-at-issue under Section 101 in a different case (between Prism and T-Mobile).
  3. Less than a week after the T-Mobile invalidation decision, Sprint sought relief from the Sprint judgment under Federal Rule of Civil Procedure 60(b). Sprint premised its motion on collateral estoppel—i.e., Sprint argued that the T-Mobile invalidity ruling required the district court to set aside the Sprint judgment because the judgment’s execution had been stayed pending completion of appeals (which had not occurred because Sprint’s cert. petition was pending before the Supreme Court).
  4. The district court granted Sprint’s motion for relief from the judgment. Prism then appealed to the Federal Circuit.

The Federal Circuit concluded that “the district court properly set aside the judgment against Sprint”, writing:

The courts have long recognized a strong federal patent policy against enforcing an unexecuted judgment of patent liability at least where all of the following circumstances are present: the patent claims underlying that judgment have been held invalid by another decision having sufficient finality for this purpose; proceedings on direct review of the judgment have not yet been completed; and no agreement exists making portions of the judgment final.

This case is notable as its holding will presumably apply in those situations where the plaintiff’s patent is invalidated in a later-decided appeal from an IPR—e.g., where the plaintiff obtains a jury verdict and judgment awarding damages but the defendant successfully invalidates the patent in a later-decided appeal from an IPR.

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Fifth Circuit Reminds Litigants: Where A Witness Is Available, The Witness Must Testify At Trial Live (Not By Deposition)

Posted on July 21, 2019 by Steven Callahan

On January 11, 2019, the Fifth Circuit issued a decision (available here) in Swearingen v. Gillar Home Heath Care. The Fifth Circuit found that the district court abused its discretion when it permitted a key witness to testify by deposition—rather than in person—at trial.

In the case, the defendant obtained deposition testimony from one of its former employees that bolstered the defendant’s claim that it did not improperly terminate the plaintiff. The defendant then filed a motion seeking permission to use the former employee’s testimony at trial by reading the deposition transcript into evidence. The district court granted the defendant’s motion, while noting that the plaintiff could subpoena the former witness to testify live at trial if the plaintiff wanted to. The plaintiff appealed.

On appeal, the defendant argued that the deposition testimony was admissible, because the witness lived 95.5 miles from the courthouse, which was “close enough to the Rule’s requirement of 100 miles” (i.e., Rule 32(a)(4)(B) allows a party to use the deposition of a witness where “the witness is more than 100 miles from the place of hearing or trial or is outside the United States, unless it appears that the witness’s absence was procured by the party offering the deposition”). The defendant also argued that the witness would “miss work and travel a lengthy distance” which would pose an “undue burden” on the witness. Finally, the defendant argued that the witness (as one of the defendant’s former employees) was not within the defendant’s “control.”

The Fifth Circuit noted that (i) it is all but inevitable that witnesses who are employed will miss work, (ii) a witness not within the control of a party is not unique, and (iii) the witness being “almost 100 miles from the trial” is not good enough to invoke Rule 32(a)(4)(B). The Rules prohibit using deposition testimony at trial unless “live testimony from the deponent is impossible or highly impracticable” and “the inconvenience of traveling any distance less than 100 miles, by itself, cannot render live testimony ‘extremely difficult or virtually impossible’ to obtain.”

The Fifth Circuit further noted that it was immaterial that the plaintiff could have subpoenaed the witness to testify live at trial—it was not the plaintiff’s burden to do so and “[a] party should not be required ‘to subpoena a hostile witness.’”

Finally, because the witness provided key testimony (i.e., the only testimony contradicting the plaintiff’s testimony on the central factual issue in the case), the admission of the deposition was not harmless. “Only through live cross-examination can the jury fully appreciate the strength or weakness of the witness’[s] testimony, by closely observing the witness’[s] demeanor, expressions, and intonations.” (citations and quotations omitted). The Fifth Circuit thus reversed and remanded for a new trial.

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Texas Supreme Court: Feel Free to Deny Those Case-Dispositive Requests for Admission Without Fear of Sanctions

Posted on July 1, 2019 by Steven Callahan

As a young attorney, I loved requests for admission. Right out of the gate, I’d serve a bunch of them asking my opponent to admit that they had no case and hope that the opponent’s counsel would forget to timely respond. Because if responses to requests for admission aren’t timely served, the subjects of the requests for admission are deemed admitted. See Tex. R. Civ. P. 198.2(c); Fed. R. Civ. P. 36(a)(3). It would be just like winning the lottery (I assume).

Over time, I stopped serving such “case dispositive” RFAs, because (i) most of the time, your opponent timely responds denying them, and (ii) even if they didn’t, it’s highly unlikely that the failure to answer such RFAs would make a difference (because a judge is very unlikely to take any action based on a failure to respond to case-dispositive RFAs). Instead, I generally use RFAs to ask my opponent to admit things that should not be controversial—e.g., admit that you signed the contract, admit that the contract is authentic, etc.

A related reason to serve “case dispositive” RFAs may be that, if your opponent does timely respond, and denies the RFA, and you ultimately prove that the opponent should have admitted the RFA, you might obtain some relief. Under the Federal Rules, for example, the recovery of attorney’s fees is a possibility if “a party fails to admit what is requested under Rule 36 and if the requesting party later proves a document to be genuine or the matter true[.]” Fed. R. Civ. 37(c)(2); see also Tex. R. Civ. P. 215.4(b) (“If a party fails to admit the genuineness of any document or the truth of any matter as requested under Rule 198 and if the party requesting the admissions thereafter proves the genuineness of the document or the truth of the matter, he may apply to the court for an order requiring the other party to pay him the reasonable expenses incurred in making that proof, including reasonable attorney fees.”). I’ve never seen it happen in any of my cases, but I guess there’s always a chance . . .

This brings me to the Texas Supreme Court’s decision in Medina v. Zuniga (available here), decided on April 26, 2019. In Medina, at the outset of the litigation “the plaintiff essentially asked the defendant to concede his negligence in every possible respect and confess he was the sole cause of the accident at issue.” But “[t]he defendant predictably denied those requests.” At trial, “the defendant made the strategic decision to concede ordinary negligence but contest the plaintiff’s gross-negligence claim.” (The first time that the defendant indicated that he would not contest his negligence was in opening statements.) The defendant denied that he was negligent in response to the plaintiff’s RFA.

After prevailing at trial, the plaintiff asked the district court to award sanctions “in the form of reasonable expenses and attorney’s fees incurred in proving up the negligence issues that the defendant ultimately conceded.” The district court awarded sanctions, and the court of appeals affirmed.

The Texas Supreme Court reversed. Although the defendant had argued that, when he denied the RFA, he reasonably believed that he might ultimately prevail in showing he was not negligent, that did not matter, as sanctions cannot attach to the denial of a merits-preclusive request:

Requests for admission are a tool, not a trapdoor. They primarily serve to simplify trials by eliminating matters about which there is no real controversy, but which may be difficult or expensive to prove. When used as intended, requests for admissions are useful in addressing uncontroverted matters or evidentiary ones like the authenticity or admissibility of documents. . . .  [T]hey were never intended to be used as a demand upon a plaintiff or defendant to admit that he had no cause of action or ground of defense. . . .

It is axiomatic that the plaintiff bears the burden to prove the defendant’s negligence. It cannot follow that the defendant who puts the plaintiff to her burden should later face sanctions for not admitting what he was entitled to deny. Our rules do not, strictly speaking, prohibit merits-preclusive requests for admissions. But due process nevertheless limits the extent to which sanctions can attach to denials of those requests. Simply put, merits-preclusive requests for admissions that carry the threat of sanctions risk putting the responding party to an impossible choice: give up your case now or face sanctions later. Worse, the responding party typically will be put to this election long before any significant discovery has occurred, leaving him unable to make an informed decision on whether to concede or contest liability.

That is not how our system works. Just as a defendant may answer the claims against him with a general denial, he may also deny a merits-preclusive request for admission for which the other party bears the burden of proof. The very nature of the request provides the respondent “good reason” for failing to admit. Likewise, absent present knowledge that he will later concede he acted negligently, a defendant acting in good faith when responding to requests for admissions may maintain that his conduct was consistent with the ordinary standard of care. This is especially true at the outset of discovery. In this case, Medina decided at trial to concede negligence he had thus far denied. He was entitled to base this decision on how various aspects of the case had turned out—discovery, pre-trial rulings, jury selection, etc. And he was entitled to do so without fear he would be unduly punished for defending himself at the case’s outset.

We need not painstakingly examine each of the requests for admissions made the basis of Zuniga’s motion for sanctions to understand the gist of her argument. Through a battery of requests, she asked Medina to admit his negligence and complete responsibility in causing the accident. He initially refused, but later acceded. These facts do not give rise to sanctionable conduct under Rule 215.4. The requests at issue did not seek to narrow the contested questions for trial by eliminating noncontroversial issues or determining the genuineness of any relevant documents. Rather, Zuniga sought to litigate the entire case in one fell swoop of discovery—or at least to force Medina to take a position on every conceivable question on the merits without the benefit of a full discovery period.

We do not doubt this is standard practice for many litigators, and we do not hold that such requests are outside the scope of Rule 198. But we reiterate: requests for admissions are no method for trying the merits. And we will not reward their use in that manner by upholding sanctions like those granted in this case. . . .

Parties may change their minds on whether to defend or concede an issue on the merits for any number of reasons, including evidence uncovered through discovery, pre-trial rulings that alter the complexion of the case, or even the selection of the particular jury to hear the case. So although Medina certainly was permitted to contest sanctions on the ground that he reasonably thought he might finally prevail, this defensive argument is not his only recourse. Rather, parties defending against a Rule 215.4 motion based on merits-preclusive requests for admissions can simply argue a “good reason” always exists under rule 215.4(b) to deny a merits-preclusive request. Put differently, the question is not necessarily whether a litigation strategy is justifiable in hindsight but whether the merits-preclusive nature of the request for admission renders a denial non-sanctionable.

(citations and quotations omitted).

Relatedly, it seems clear that deemed admissions arising from untimely served RFA responses cannot be used to preclude a defendant from contesting the validity of the plaintiff’s claims or force him to concede his defenses, because that would offend due process (which generally affords a party the opportunity for a hearing on the merits of his cause.).

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Texas Supreme Court Holds that Conspiracy Cause of Action Has Same Statute of Limitations As Underlying Tort, Not Invariably a Two-Year Statute of Limitations

Posted on July 1, 2019 by Steven Callahan

Until April 5, 2019, every Texas court of appeals considering what statute of limitations applied to a conspiracy claim got it wrong. So holds the Texas Supreme Court in Agar Corp. v. Electro Circuits International (available here).

In Agar, the court of appeals applied the two-year statute of limitations generally applicable to most torts to find that a conspiracy claim also had a two-year statute of limitations. The Texas Supreme Court reversed, holding that, “[b]ecause civil conspiracy is a derivative tort that depends on participation in some underlying tort, . . . the applicable statute of limitations must coincide with that of the underlying tort for which the plaintiff seeks to hold at least one of the named defendants liable.” (citations and quotations omitted).

This makes good sense. After all, under the court of appeals’ contrary finding, a defendant who commits defamation must be sued within one year after making the defamatory statement, but a plaintiff could sue his co-conspirator under a two-year statute of limitations. Similarly, a defendant who commits fraud could be sued within four years, but her conspirator had to be sued within two years. That didn’t make much sense.

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Texas Supreme Court Issues Important Guidance for Proving Up Claim for Attorney’s Fees—TLDR: Keep Detailed Time Records

Posted on July 1, 2019 by Steven Callahan

On April 26, 2019, the Texas Supreme Court issued its opinion in Rohrmoos Venture v. UTSW DVA Healthcare (available here). The case has importance guidance concerning attorney’s fees under Texas law. Notable points include:

  • When seeking attorney’s fees, a claimant must “put on evidence of reasonable hours worked multiplied by a reasonable hourly rate” which “yield[s] a base figure [i.e., the lodestar amount] that can be adjusted by considerations not already accounted for in either the hours worked or the rate.” Prior to the decision, there was confusion as to whether one should use the so-called Arthur Anderson factors [1] to calculate the base amount of attorney’s fees, and what Arthur Anderson factors should be utilized when adjusting the “lodestar” amount upwards or downwards. The “lodestar” method developed as a “short hand version” of the Arthur Anderson factors “and was never intended to be a separate test or method.” 
  • The lodestar “base calculation” (i.e., time x rate) is the “presumptively reasonable” amount of attorney’s fees. The claimant bears the burden of providing sufficient evidence on both the time and the rate. “Sufficient evidence includes, at a minimum, evidence of (1) particular services performed, (2) who performed those services, (3) approximately when the services were performed, (4) the reasonable amount of time required to perform the services, and (5) the reasonable hourly rate for each person performing such services.”
  • According to the Court, “the lodestar calculation should produce an objective figure that approximates the fee that the attorney would have received had he or she properly billed a paying client by the hour in a similar case.” Further, “[t]his readily administrable and objectively reasonable calculation is the standard for calculating the reasonableness and necessity of attorney’s fees in a fee-shifting situation.”
  • After the “base calculation” is performed, the calculation can either be enhanced or reduced. The following Arthur Anderson considerations cannot be used to adjust the base calculation, as they are usually reflected in the base lodestar calculation: (i) “the time and labor required,” (ii) “the novelty and difficulty of the questions involved,” (iii) “the skill required to perform the legal services properly,” (iv) the fee customarily charged in the locality for similar legal services, (v) the amount involved, (vi) “the experience, reputation, and ability of the lawyer or lawyers performing the services,” (vii) “whether the fee is fixed or contingent on results obtained,” (viii) “the uncertainty of collection before the legal services have been rendered,” and (ix) the “results obtained” up to trial. If a fee claimant or a fee opponent seeks an upward or downward adjustment it must produce specific evidence showing that a higher amount is necessary to achieve a reasonable fee award or to overcome the presumptive reasonableness of the base lodestar figure, respectively.
  • The Court also addressed what happens when the attorney is charging under an alternative billing arrangement (e.g., flat fee, fixed fee, etc.):

We recognize that when fee agreements provide for arrangements other than hourly billing, the attorney will not be able to present evidence of a particular hourly rate billed or paid for the services performed. In those instances, the fee claimant, through its expert, has the burden of showing that the rate claimed for purposes of the base lodestar calculation reflects a reasonable market rate given considerations in Arthur Andersen, including the attorney’s experience and expertise, the novelty and complexity of the questions involved, any special skill required for the representation, the attorney’s risk in accepting such representation, which may be reflected in a contingent fee agreement, and any other considerations that would factor into an attorney’s fee negotiations if the attorney were to bill hourly.

  • When fee-shifting is authorized (by statute or contract), the party seeking a fee award “must prove the reasonableness and necessity of the requested attorney’s fees.” “[O]nly fees reasonable and necessary for the legal representation will be shifted” and “not necessarily the amount contracted for between the prevailing party and its attorney, as a client’s agreement to a certain fee arrangement or obligation to pay a particular amount does not necessarily establish that fee as reasonable and necessary.” “[F]act finders should be concerned with awarding reasonable and necessary fees, not with any contractual obligations that may remain between the attorney and client.” Accordingly, “a client could ultimately owe its attorney more fees than the amount of the award shifting fees to the non-prevailing party.”  
  • A party must be represented by an attorney to secure an award of attorney’s fees (the attorney may be in-house counsel).
  • The amount of reasonable and necessary attorney’s fees “are questions of fact to be determined by the fact finder[.]”
  • Some statutes allow recovery for attorney’s fees that are “incurred.” In those instances, a fee can only be recovered “when one becomes liable for it.” (A pro se attorney cannot recover fees under a statute that mandates that the fees be “incurred” because the pro se attorney did not “incur” attorney’s fees.) When statutes do not contain an explicit requirement that the fees be “incurred” courts will not imply such a term.
  • A party need not be awarded monetary damages to recover under an agreement that contains a provision that specifies that the prevailing party shall be entitled to recover its attorney’s fees. (Texas courts have interpreted some statutes (e.g., Chapter 38 of the Texas Civil Practices and Remedies Code) as containing a requirement that, in order to recover fees, the claimant must prove damages).
  • A defendant can be a prevailing party by successfully defending against the plaintiff’s claim, because it has achieved a material alteration in its legal relationship with the plaintiff.
  • To recover attorney’s fees, it is not enough for the party’s attorney to testify as to (i) his number of years of experience, (ii) his standard rate, (iii) that he has handled similar cases, and (iv) what the reasonable and necessary number of hours to spend on the case would be. In this case, the attorney did not attempt to introduce billing records into evidence, nor did he testify to the details of his work. 
  • Time estimates based on generalities are not sufficient to support a fee-shifting award. Nor is general testimony about an attorney’s experience, the total amount of fees, and the reasonableness of the fees.
  • “General, conclusory testimony devoid of any real substance will not support a fee award. Thus, a claimant seeking an award of attorney’s fees must prove the attorney’s reasonable hours worked and reasonable rate by presenting sufficient evidence to support the fee award sought. Sufficient evidence includes, at a minimum, evidence of (1) particular services performed, (2) who performed those services, (3) approximately when the services were performed, (4) the reasonable amount of time required to perform the services, and (5) the reasonable hourly rate for each person performing such services.”
  • Although “[c]ontemporaneous billing records are not required to prove that the requested fees are reasonable and necessary”, “billing records are strongly encouraged to prove the reasonableness and necessity of requested fees when those elements are contested.” (emphasis added). “Creating [the billing records] makes them available for production, provides a basis for testifying as to the reasonableness and necessity of the requested fees, and permits cross-examination.”
  • The Court stated that it did not want “satellite litigation” as to fees: “Importantly, however, we are not endorsing satellite litigation as to attorney’s fees. The fact finder will generally not benefit from attorneys cross-examining each other point-by-point on every billable matter. Parties should use discovery and pretrial procedure to evaluate attorney’s fee claims and the evidence supporting them, then present to the fact finder the evidence relevant to determining a reasonable and necessary fee as discussed in this opinion.” (Note: In a run-of-the-mill case, this is all well and good. But there are some cases where the parties’ respective claims for attorney’s fees quickly dwarf the amount of compensatory damages at issue, and one’s opponent has billed an unreasonable amount. In that situation, it makes sense for any competent attorney to devote a substantial amount of his or her trial presentation to the unreasonableness of the other party’s fee request. (For example, in the instant case, one party requested $1.3 million in fees while seeking less than $300,000 in compensatory damages).)

[1] The Arthur Anderson factors are as follows: (i) the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service properly; (ii) the likelihood . . . that the acceptance of the particular employment will preclude other employment by the lawyer; (iii) the fee customarily charged in the locality for similar legal services; (iv) the amount involved and the results obtained; (v) the time limitations imposed by the client or by the circumstances; (vi) the nature and length of the professional relationship with the client; (vii) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (viii) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered.

p.s. I’m now so old that clients have used abbreviations in e-mails with me that I had to look up (TLDR=Too Long, Didn’t Read). #Cloudflare.

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Supreme Court Holds That IPRs Are Not Available To The Government

Posted on June 16, 2019 by Steven Callahan

On June 10, 2019, the Supreme Court issued its 6-3 decision in Return Mail, Inc. v. United States Postal Service (decision available here). The American Invents Act of 2011 created the Patent Trial and Appeal Board, and allowed three new types of administrative proceedings (IPR, CBM, and PGR proceedings) before the Board that allow a “person,” other than the patent owner, to challenge the validity of a patent post-issuance. The Court found that the Government was not a “person” under the statute, such that the PTAB proceedings are not available to it.

The Court essentially resolved the case based on (i) the principle that, “in the absence of an express statutory definition, the Court applies a longstanding interpretive presumption that ‘person’ does not include the sovereign” and (ii) the Dictionary Act, 1 U.S.C. § 1, which excludes the Government from the definition of “person.” Congress, of course, is free to change the statute and make post-grant proceedings available to the Government. But until then, the Government cannot invoke these post-granting proceedings.

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Federal Circuit Finds That States’ Patents Are Subject To IPRs, Rejecting Sovereign Immunity Defense

Posted on June 16, 2019 by Steven Callahan

On June 14, 2019, the Federal Circuit issued its decision in Regents of the University of Minnesota v. LSI Corp. (available here). The Federal Circuit found that “state sovereign immunity does not apply to” inter partes review proceedings, as the Federal Government’s role in IPRs renders it a superior sovereign (i.e., IPRs represent the sovereign’s reconsideration of the initial patent grant). This is consistent with the Federal Circuit’s earlier decision in Saint Regis Mohawk Tribe finding that a Native American Tribes’ sovereign immunity does not apply in IPRs.

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Another Decision Holding That Section 285 Attorney’s Fees Are Not Available From A Party’s Counsel (And Also Finding That Folks Don’t Go To Jail For Failing To Pay Debts)

Posted on June 16, 2019 by Steven Callahan

The Eastern District of Texas’ Magistrate Judge Payne, on June 5, 2019, issued a decision in My Health, Inc. v. ALR Technologies, Inc. (available here), finding that 35 U.S.C. § 285 does not allow an award of attorney’s fees against a party’s counsel. I previously discussed an earlier case holding the same.

Interestingly, the defendants in My Health, after being awarded their attorney’s fees from the plaintiff My Health (and My Health failing to pay such fees), sought an order to show cause why My Health should not be held in contempt of court for failing to pay the fees. (The defendants apparently forgot that debtors’ prisons went out of style a long time ago.) Judge Payne rejected this request:

Defendants seek an order from this Court holding My Health in civil contempt for failing to pay the attorneys’ fees previously awarded to Defendants. However, contempt is not the appropriate mechanism for enforcing the § 285 Order. Any claim to attorneys’ fees must be processed in compliance with Federal Rule of Civil Procedure 54(d)(2)(B). IPXL Holdings, L.L.C. v. Amazon.com, Inc., 430 F.3d 1377, 1386 (Fed. Cir. 2005). A Rule 54(d) award of attorneys’ fees is considered a money judgment. Federal Rule of Civil Procedure 69 provides for post-judgment remedies. See 3 Kids, Inc. v. Am. Jewel, LLC, No. 3:18-MC-096-S (BH), 2019 WL 462781, at *2 (N.D. Tex. Jan. 15, 2019), report and recommendation adopted, No. 3:18-MC-096-S, 2019 WL 460325 (N.D. Tex. Feb. 6, 2019). Rule 69 provides that a “money judgment is enforced by a writ of execution, unless the court directs otherwise.” Fed. R. Civ. P. 69(a)(1).

Here, the attorneys’ fees award under § 285 is a money judgment. The Court will thus not hold My Health in civil contempt for failure to pay where such an award is enforceable through a writ of execution and other methods for enforcing money judgments. Defendants’ contempt motion (Dkt. No. 183) is therefore denied.

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