In re Processing Ethanol Byproducts & Related Subsystems '858 Patent Litig.

• Decision Date: 04 May 2022
• Docket Number: 1:10-ML-2181 RLM-DML
• Parties: IN RE METHOD OF PROCESSING ETHANOL BYPRODUCTS AND RELATED SUBSYSTEMS '858 PATENT LITIGATION This Document Relates to 1:10-cv-0180-RLM-DML, 1:10-cv-8000-RLM-DML, 1:10-cv-8001-RLM-DML, 1:10-cv-8002-RLM-DML, 1:10-cv-8003-RLM-DML, 1:10-cv-8004-RLM-DML, 1:10-cv-8005-RLM-DML, 1:10-cv-8006-RLM-DML, 1:10-cv-8007-RLM-DML, 1:10-cv-8008-RLM-DML, 1:10-cv-8009-RLM-DML, 1:10-cv-8010-RLM-DML, 1:13-cv-8012-RLM-DML, 1:13-cv-8013-RLM-DML, 1:13-cv-8014-RLM-DML, 1:13-cv-8015-RLM-DML, 1:13-cv-8016-RLM-DML, 1:13-cv-8017-RKM-DML, 1:13-cv-8018-RLM-DML, 1:14-cv-8019-RLM-DML, 1:14-cv-8020-RLM-DML
• Court: U.S. District Court — Southern District of Indiana

IN RE METHOD OF PROCESSING ETHANOL BYPRODUCTS AND RELATED SUBSYSTEMS '858 PATENT LITIGATION This Document Relates to 1:10-cv-0180-RLM-DML, 1:10-cv-8000-RLM-DML, 1:10-cv-8001-RLM-DML, 1:10-cv-8002-RLM-DML, 1:10-cv-8003-RLM-DML, 1:10-cv-8004-RLM-DML, 1:10-cv-8005-RLM-DML, 1:10-cv-8006-RLM-DML, 1:10-cv-8007-RLM-DML, 1:10-cv-8008-RLM-DML, 1:10-cv-8009-RLM-DML, 1:10-cv-8010-RLM-DML, 1:13-cv-8012-RLM-DML, 1:13-cv-8013-RLM-DML, 1:13-cv-8014-RLM-DML, 1:13-cv-8015-RLM-DML, 1:13-cv-8016-RLM-DML, 1:13-cv-8017-RKM-DML, 1:13-cv-8018-RLM-DML, 1:14-cv-8019-RLM-DML, 1:14-cv-8020-RLM-DML

No. 1:10-ML-2181 RLM-DML

United States District Court, S.D. Indiana, Indianapolis Division

May 4, 2022

OPINION AND ORDER

Robert L. Miller, Jr., Judge, United States District Court

The defendants' motions for attorneys' fees and expenses and their joint motion to strike the affidavit of the plaintiff's expert, David McMahon, are before

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the court. For the reasons that follow, the court grants the motion to strike and grants the motions for fees in part.

As a preliminary but necessary matter, the court apologizes to the parties for the length of time it has taken to resolve these motions. The original transferee judge, Larry McKinney, did nearly all the heavy lifting in this case, and then passed. The successor judge had a lot of catching up to do. Recognizing the magnitude of the record to be reviewed, the court appointed a special master to recommend resolution of the motions, but health problems during the pandemic kept him from accomplishing his task, so court took matters back into chambers. At long last, the court rules.

I. Standard of Review

"[A] district court may award fees in the rare case in which a party's unreasonable conduct - while not necessarily independently sanctionable - is nevertheless so 'exceptional' as to justify an award of fees." Octane Fitness, LLC v. Icon Health & Fitness, Inc., 572 U.S. 545, 555 (2014); Kilopass Techy., Inc. v. Sidense Corp., 738 F.3d 1302, 1313 (Fed. Cir. 2013) ("[T]he aim of 285 is to compensate a defendant for attorneys' fees it should not have been forced to incur."). A prevailing party that obtains "excellent results . . . should recover a fully compensatory fee" that normally "will encompass all hours reasonably

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expended on the litigation." Hensley v. Eckerhart, 461 U.S. 424, 435 (1983); Mathis v. Spears, 857 F.2d 749, 755 (Fed. Cir. 1988).

Hensley sets the standard for determining whether a fee request is reasonable, and provides that "[t]he most useful starting point is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate," commonly known as the lodestar. Id. at 433; see also Divane v. Krull Elec. Co., 319 F.3d 307, 317 (7th Cir. 2003); Spegon v. Cath. Bishop of Chi., 175 F.3d 544, 550 (7th Cir. 1999); Eli Lilly & Co. v. Zenith Goldline Pharms., Inc., 264 F.Supp.2d 573 (S.D. Ind. 2003) (standard method for determining reasonable attorney fees in "exceptional" patent cases is the "lodestar" method). A lodestar containing reasonable hours and reasonable hourly rates is presumptively, but not irrebuttably, reasonable. See Hensley v. Eckerhart, 461 U.S. at 433-434.

"The party seeking the fee award bears the burden of proving the reasonableness of the hours worked and the hourly rates claimed." Spegon v. Cath. Bishop of Chi., 175 F.3d at 550 (citing Hensley v. Eckerhart, 461 U.S. at 433). If the hours were not reasonably expended, or the documentation of hours is inadequate, the court must exclude them from its fee calculation. Hensley v. Eckerhart, 461 U.S. at 434; Spegon v. Cath. Bishop of Chi., 175 F.3d at 550. The court may adjust the modified lodestar based on a "variety of factors, the most

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important of which is the 'degree of success obtained.'" Spegon v. Cath. Bishop of Chi., 175 F.3d at 550 (citing Hensley v. Eckerhart, 461 U.S. at 434-436).

A reasonable hourly rate is derived from the "market rate" for the services rendered. Montanez v. Simon, 755 F.3d 547, 553 (7th Cir. 2014); Spegon v. Cath. Bishop of Chi., 175 F.3d at 554; People Who Care v. Rockford Bd. of Educ, 90 F.3d 1307, 1310 (7th Cir. 1996). The "market rate is the rate that lawyers of similar ability and experience in the community normally charge their paying clients for the type of work in question." Spegon v. Cath. Bishop of Chi., 175 F.3d at 555 (citations omitted). "The attorney's actual billing rate for comparable work is 'presumptively appropriate' to use as the market rate." People Who Care v. Rockford Bd. of Educ, 90 F.3d at 1310. So too, evidence that clients paid the fees that were billed is sufficient to show reasonableness. Cintas Corp. v. Perry, 517 F.3d 459, 469 (7th Cir. 2008) ("[T]hebest evidence of whether attorney's fees are reasonable is whether a party has paid them."); In re Synthroid Mktg. Litig., 264 F.3d 712, 722 (7th Cir. 2001) ("If counsel submit bills with the level of detail that paying clients find satisfactory, a federal court should not require more."); Balcor Real Estate Holdings, Inc. v. Walentas-Phoenix Corp., 73 F.3d 150, 153 (7thCir. 1996) ("[T]he best evidence of the market value of legal services is what people pay for it. Indeed, this is not 'evidence' about market value; it is market value.").

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"[O]nce the attorney provides evidence of the market rate, the burden shifts to the opposing party to show why a lower rate should be awarded." Vega v. Chi. Park Dist., 12 F.4th 696, 705 (7th Cir. 2021) (quoting Stark v. PPM Am. Inc., 354 F.3d 666, 675 (7th Cir. 2004)).

II. BACKGROUND

The facts in this case were set out in great detail in GS Cleantech Corp v. Adkins Energy LLC, 951 F.3d 1310, 1316-1324 (Fed. Cir. 2020), and only a skeletal recounting is needed for today's purposes. Between 2009 and 2014, GS CleanTech Corporation filed suit against a number of defendants in various states alleging that they violated its patented method for extracting corn oil from ethanol byproducts. In 2010, The Judicial Panel on Multi-District Litigation consolidated the cases in the Southern District of Indiana for pretrial proceedings in MDL No. 2181, Cause No. 1:10-ML-2181, which culminated in an overwhelming victory for the defendants, who prevailed on summary judgment, when Judge McKinney invalidated CleanTech's patents and ruled them unenforceable, In re Method of Processing Ethanol Byproducts & Related Subsytems ('858') Patent Litig., 303 F.Supp.3d 791 (S.D. Ind. 2014), at trial on their inequitable conduct claim. In re Method of Processing Ethanol Byproducts & Related Substems ('858') Patent Litig., No. 1:10-ml-2181 LJM-DML, 2016 WL 4919980 (S.D. Ind. Sep. 15, 2016). The ruling was affirmed on appeal, GS CleanTech Corp. v. Adkins Energy LLC, 951 F.3d 1310

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(Fed. Cir. 2020), cert, denied, 141 S.Ct. 1377 (2021), and enforced on on the motion for an exceptional case declaration and award of fees under 35 U.S.C. § 285 [Doc. No. 1908]. The amount of that award remains to be determined.

Fifteen law firms and more than 200 attorneys, paralegals, technical assistants, and support staff provided services to the defendants over the protracted course of this litigation. The defendants seek in excess of $16 million for those services, related non-taxable expenses, and the expert fees they incurred between 2010 and January 30, 2018, as well as prejudgment interest. They also seek leave to file supplemental motions for fees incurred on appeal. This is a summary of what they have asked for^[1]:

Defendant	Counsel of Record	Amts Requested
GEA Mechanical Equipment U.S. and Ace Ethanol, LLC [Doc. No. 1792] (Binder No. 4)	Patterson Belknapp Webb &Tyler LLP (New York)	Attys Fees: $3, 753, 548.32 Expenses: 150, 561.20 Experts: 160, 627.06 TOTAL: $4, 064, 736.58
ICM and its customers [Doc. Nos. 1759 and 1760-1] (Binder No. 5)	Dicke, Billig &Czaja (Minneapolis, MN) Patterson Belknapp (New York, NY)	Attys Fees: $3, 186, 945.21 Expenses: 144, 739.14 Experts: 176, 034.56 TOTAL: $3, 507, 718.91

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Fleeson, Gooing, Coulson &Kitch (Wichita, KS) Baker &Daniels (Indianapolis, IN) (Chicago, IL) Cozen O'Connor (New York, NY) Brian Burris/Hinkle Law Firm Schwegman, Lundberg, Woessner, P.A. (Minneapolis, MN) Woodard Emhardt (Indianapolis, IN)
Bushmills Ethanol Chippewa Valley Ethanol Co. Heartland Corn Products United Wisconsin Grain Producers [Doc. No. 1786-1]	Michael Best &Friedrich (Madison, WI)	Attys Fees: $2, 669, 311.26[2] Expenses: 73, 223.11 Experts: 98, 214.83 TOTAL: $2, 840, 749.20

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(Binder No. 9)
Iroquois Bio-Energy [Doc. No. 1777-1] (Binder No. 6)	Woodard, Emhardt, Moriarty, McNett &Henry (Indianapolis, IN)	Attys Fees: $1, 375, 400.50 Expenses: 52, 695.71 Experts: 20, 957.10 TOTAL: $ 1, 449, 053.31
Blue Flint Ethanol [Doc. No. 1789] (Binder No. 3)	Stinson Leonard Street, LLP (Minneapolis, MN)	Attys Fees: $ 899, 413.57 Jt Def Fund: 50, 000.00 Expenses: 69, 913.06 Experts: 23, 137.39 TOTAL: $1, 042, 464.02
Al-Corn Clean Fuel [Doc. No. 1746-1] (Binder No. 2)	Stoel Rives LLP (Minneapolis, MN)	Attys Fees: $ 755, 803.55 Jt Def Fund: 50, 000.00 Expenses: 26, 137.32 Experts: 170, 555.94 TOTAL: $1, 002, 496.81[3]
Lincolnway Energy [Doc. No. 1787] (Binder No. 7)	Nyemaster Goode, PC (Iowa)	Attys Fees: $ 938, 996.84 Expenses: 30, 802.41 Experts: 30, 007.65 TOTAL: $ 999, 806.90
Aemetis and Aemetis Advanced Fuels Keyes	Brown, Winick, Graves, Gross, Baskerville & Schoenebaum	Attys Fees: $ 399, 941.69 Expenses: -0- Experts:

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[Doc. No. 1765-1] (Binder No. 8) (Des...