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Dungee v. Davison Design & Development Inc.

United States District Court, D. Delaware

March 1, 2018

DEBORAH DUNGEE, on behalf of herself and all others similarly situated, Plaintiff,
v.
DAVISON DESIGN & DEVELOPMENT, INC., formerly known as DAVISON & ASSOCIATES, INC., Defendant.

          MEMORANDUM

         I. INTRODUCTION

         Plaintiff Deborah Dungee ("Dungee") filed a putative class action complaint against Defendant Davison Design & Development, Inc. ("Davison"), claiming that: (1) Davison breached its agreements with Dungee; (2) Davison violated the American Inventor's Protection Act of 1999, 35 U.S.C. § 297 (the "AIPA") by making material misrepresentations; and (3) Davison violated the AIPA by failing to make the proper disclosures under the statute. (D.I. 1.) After settling the "claims-made, " the court issued an order granting $1, 118, 936.40 in attorney's fees to Dungee's counsel ("Class Counsel"), which was calculated using the lodestar amount of $257, 226.76 enhanced by a multiplier of 4.35. (D.I. 36 at 8; D.I. 51 at 4 n.2; D.I. 61 at 4.) Davison appealed the award to the Third Circuit, and the case was remanded for the court to specify evidence on the record that supports the application of an enhancement multiplier. Dungee v. Davison Design & Development Inc., 674 Fed.App'x 153 (3d Cir. 2017).

         Currently pending before the court is Dungee's Motion on Remand for Attorneys' Fees and Expenses. (D.I. 61.) Dungee requests that the court award Class Counsel $525, 125.89 in fees, which would be calculated by using an increased lodestar amount that encompasses fees for the time spent on appeal and an enhancement multiplier of 1.73. (D.I. 61; D.I. 63.)

         Davison suggests that the court award Class Counsel the lodestar amount of $257, 226.76, which does not include fees for time spent on appeal or an enhancement multiplier. (D.I. 62.) For the following reasons, the court will grant Class Counsel an award of $325, 878.44 in attorney's fees and costs.

         II. BACKGROUND

         On April 21, 2010, Dungee filed suit on behalf of Davison's customers who entered into agreements with Davison for invention related services between January 28, 2000 and March 19, 2006. (D.I. 1.) Dungee alleged that Davison breached its agreements with her, thereby violating the AIPA, by making material misrepresentations and by failing to make disclosures of how successful Davison was in promoting the inventions of their clients, as required by the statute. (D.I. 1.) Davison filed a motion to dismiss on June 3, 2010, which was denied by the court on March 29, 2011. (D.I. 6; D.I. 15.) After Davison's motion to dismiss was denied, there were no depositions, no discovery motions, no summary judgment proceedings, no pre-settlement class-certification proceedings, and no pre-settlement class-certification court appearances. Instead, Class Counsel spent time exchanging and reviewing documents in preparation for the settlement negotiations with JAMS mediators, engaging in those settlement negotiations, and communicating with class members. (D.I. 61 at 1; D.I. 61 at Ex. B.) After three years of settlement negotiations, the parties agreed to a "claims-made" settlement on December 8, 2014. (D.I. 34-1.) Additionally, the parties agreed that Davison would pay Class Counsel's fees, but did not agree on an amount at that time. (D.I. 36 at 3.)

         On April 10, 2015, Dungee sought $2 million in fees in her Motion for Award of Attorney's Fees and Expenses and Class Representative Incentive Award. (D.I. 36.) In her motion, Dungee claimed that the common fund doctrine of the percent-of-recovery method should apply. (D.I. 36 at 5-7.) Dungee argued that the common fund should be valued at the total amount made available to the class, which was $25, 492, 157.50. (D.I. 36 at 7.) At the time of the filing of the initial fee request, the parties had not yet determined the value of the timely submitted claims. (D.I. 49.) According to Dungee, her $2 million request, thus, represented 7.8% of the value of the entire settlement available to class members. (D.I. 36 at 7.) Thus, Dungee concluded that Class Counsel's fee request was fair and reasonable because it was below the Third Circuit's precedent that a reasonable award of attorney's fees should be within the range of 19% to 45% of the common fund. (D.I. 36 at 7.)

         In contrast, Davison argued that the lodestar calculation method was more appropriate under the circumstances because the total value of the fund made available to the class was not representative of the value the class would receive. (D.I. 41.) Davison developed the $257, 226.76 lodestar value using Class Counsel's hourly billing rates from 2010 multiplied by 611-the hours Class Counsel spent on the case until Dungee filed her initial motion for attorney's fees on April 10, 2015. (D.I. 36 at 8; D.I. 36 at 8; D.I. 61 at 4.) Davison concluded that Class Counsel's lodestar amount was a fair and reasonable award of attorney's fees. (D.I. 41.)

         On July 30, 2015, the court held a class action settlement fairness hearing at which the parties presented their attorney's fees arguments. (D.I. 47-1). After the hearing, the parties jointly stipulated that the total value of the timely submitted class claims was $564, 735.50. (D.I. 49.) On February 16, 2016, the court issued an order granting Class Counsel a fee award. (D.I. 51.) To determine the amount of the award, the court used the lodestar method starting with the parties' agreed upon lodestar amount of $257, 226.76, and applied a 4.35 enhancement multiplier, which resulted in an award of $1, 118, 936.40. (D.I. 51 at n.2.)

         Davison timely appealed the court's fee award on March 11, 2016. (D.I. 55.) The Third Circuit vacated the award and remanded the case on January 6, 2017 for the court to "reassess whether an enhancement to the lodestar calculation is appropriate in this case and, if so, . . . [to] provide factual findings supporting any multiplier used." Dungee, 674 Fed.Appx. at 155.

         III. STANDARD OF REVIEW

         The general rule in the United States is that each party must pay its own attorney's fees and expenses except where a federal statute explicitly authorizes otherwise. Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 561 (1987); see also Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975). Under the ATP A, district courts are authorized to award the prevailing party reasonable costs and attorney's fees. 35 U.S.C. § 297(b)(1). The grant of attorney's fees is not automatic, rather the party seeking such fees bears the burden of proving the reasonableness of its request. Del. Valley Citizens' Council for Clean Air, 478 U.S. at 564 (citing Blum v. Stenson, 465 U.S. 886, 897 (1984)). Therefore, the grant of attorney's fees turns on the facts of each case, and the district court must use its discretion to determine how to calculate the fees and what fees are reasonable. In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 55 F.3d 768, 821 (3d Cir. 1995).

         "There are two primary methods for calculating attorney's fees awards in the class action context: (1) the percentage-of-recovery method; and (2) the lodestar method." In re Cendant Corp. PRIDES Litig., 243 F.3d 722, 732 (3d Cir. 2001) (footnote omitted). The lodestar method is appropriate in cases involving a fee-shifting statute and carries with it a strong presumption of reasonableness. Del. Valley Citizens' Council for Clean Air, 478 U.S. at 565. The lodestar analysis starts with an assessment of reasonable fees using "the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." Id. at 564. Where the lodestar method is implemented, enhancement multipliers may be added if "rare" or "exceptional" circumstances of the case suggests "superior attorney performance." Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 554 (2010). The party requesting an enhancement to the lodestar carries the burden of showing that a multiplier is necessary to reach a fair and reasonable fee award using "specific evidence on the record." Dungee, 674 Fed.Appx. at 157.

         IV. ...


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