iWhat do you get when opposing counsel repeatedly cancels depositions only days before they are scheduled, allegedly fails to abide by confidentiality agreements and court orders, and repeatedly files supposedly baseless motions requiring substantive responses? Perhaps nothing. At least that appears to be the case from a recent order issued in Massachusetts federal court.
The order decided a post-trial motion for attorneys’ fees and expenses filed by plaintiff Ascion, LLC in a now-resolved patent row. Ascion originally sued Ruoey Lung Enterprise Corp. in June 2009, seeking, among other things, a declaratory judgment of noninfringement of U.S. Patent No. 7,488,100, titled “Motorized Bed that is Movably Closer to the Wall,” unpaid commissions, and indemnification for costs incurred in connection with a separate patent infringement action filed against Ascion by another competitor. After what appears to be a contentious litigation, the patent claims – including the claim for a declaratory judgment of non-infringement – were dismissed, and the commissions claim was tried to a jury. After trial, the jury awarded Ascion more than $2.5 million for unpaid commissions.
Following the jury verdict, Ascion moved for fees and costs under two federal statues and a written agreement between the parties: (a) 35 U.S.C. § 285, (b) 28 U.S.C. § 1927, and (c) a pre-litigation “Commission Agreement” that had been entered into by the parties before litigation began. Notably, Ascion’s motion sought fees not only from the defendant, Ruoey Lung Enterprise Corp., but also from the defendant’s pre-trial counsel, Wang, Hartmann, Gibbs & Cauley (“WHGC”). (Prior to trial, Ruoey Lung obtained new counsel from whom Ascion did not seek recovery of fees and expenses.)
The motion outlined a litany of conduct which, according to Ascion, was so unreasonable and vexatious as to merit sanctions under § 1927. Allegations highlighted in Ascion’s motion included supposed efforts by the defendant to evade service of process, improper forum shopping, failure to attend depositions in the United States absent a court order, repeated and belated cancelations of depositions, interference with Ascion’s business relationship with a third party, interference by defense counsel with an agreement in principle to settle, breach of a confidentiality agreement, and repeated filing of baseless motions.
Despite the volume of the alleged misconduct, the Court denied Ascion’s motion. With regard to the allegations regarding WHGC’s supposed forum shopping, the Court noted that “[j]ockeying for a favorable forum is, for good or ill, not uncommon in patent litigation…” The Court also rejected Ascion’s allegations of service evasion with the observation that “the evidence is not persuasive enough to convince me that either van Loben Sels or WHGC affirmatively encouraged such behavior by their clients.” And, similarly addressing WHGC’s purported “meritless motion practice,” the Court said, “again it does not appear clear enough for the imposition of sanctions that counsel’s actions meet the § 1927 threshold.”
But it seems that the § 1927 standard was the key to the denial. The Court expressed concern about WHGC’s “troubling” deposition activities and appeared to leave open the possibility that similar conduct may indeed warrant sanctions – not under § 1927, but pursuant to Rule 37 of the Federal Rules of Civil Procedure. Specifically, the Court noted that “in the circumstances, Rule 37 is a more proper vehicle for relief from sanctionable discovery behavior than § 1927.”
Massachusetts litigants may take heed of the order as an indication that, should one encounter seemingly unreasonable or vexatious tactics, it may be prudent to keep Rule 37 in mind at the time of the incident, rather than wait to file a motion for costs pursuant to § 1927.
The case is Ascion, LLC v. Ruoey Lung Enterprise Corp., 1-09-cv-11550 in the District of Massachusetts. A copy of the Court’s order denying the motion for fees and costs is available here.
