Nordock Inc. v. Sys. Inc.

• Decision Date: 26 February 2013
• Docket Number: Case No. 11–C–118.
• Citation: 927 F.Supp.2d 577
• Parties: NORDOCK INC., Plaintiff–Counterclaim–Defendant, v. SYSTEMS INC., Defendant–Counterclaimant.
• Court: U.S. District Court — Eastern District of Wisconsin

927 F.Supp.2d 577

NORDOCK INC., Plaintiff–Counterclaim–Defendant,

v.SYSTEMS INC., Defendant–Counterclaimant.

Case No. 11–C–118.

United States District Court,

E.D. Wisconsin.

Feb. 26, 2013.

Gregory W. Lyons, O'Neil Cannon Hollman Dejong & Laing SC, Jeffrey S. Sokol, Sokol Law Office, Milwaukee, WI, for Plaintiff–Counterclaim–Defendant.

Philip P. Mann, Mann Law Group, John Whitaker, Whitaker Law Group, Seattle, WA, David A. Affeldt, Affeldt Law Offices, West Allis, WI, for Defendant–Counterclaimant.

DECISION AND ORDER

RUDOLPH T. RANDA, District Judge.

The Plaintiff and Counterclaim–Defendant, Nordock Inc., (“Nordock”), and the Defendant–Counterclaimant, Systems Inc. (“Systems”), are rivals in the loading dock device industry. Both companies design, manufacture, and sell dock levelers which are mechanical devices used to create a bridge between loading dock surfaces and the surfaces of truck load beds. Both companies are currently manufacturing dock levelers that use a lip, lug and hinge plate design to bridge the gap between the loading dock and a truck load bed.

Nordock alleges that several models of Systems' dock levelers are infringing on its design patent, United States Design Patent Number D 579,754 (the “'754 patent”), for a lip, lug, and hinge plate in violation of 35 U.S.C. § 271 (Count I), engaging in federal unfair competition in violation of 15 U.S.C. § 1125 (Count II), common law unfair competition (Count III), and unfair methods of competition or unfair deceptive acts or practices under Wisconsin Statutes §§ 100.18 and 100.20 (Count IV). Systems' counterclaim seeks declaratory judgment of non-infringement and invalidity of the '754 patent.

This Decision and Order addresses the following five motions: Nordock's motions to strike Adam Brookman (“Brookman”) as an expert witness regarding trade dress and unfair competition and to strike Brookman as an expert as to the validity, claim construction and infringement of the '754 patent; and for partial summary judgment with respect to the '754 patent; and Systems' motions for summary judgment dismissing all the claims of Nordock's Complaint, and for an order to pay expert fees. The Court begins by addressing the motion regarding payment of expert fees.

SYSTEMS' MOTION FOR AN ORDER TO PAY EXPERT FEES

Systems requests an order directing Nordock to pay expert fees (ECF No. 113), relying on the Court's November 21, 2012, Decision and Order (ECF No. 97) requiring Nordock to pay the reasonable fees of experts Brookman and Richard F. Bero (“Bero”), pursuant to Federal Rule of Civil Procedure 26(b)(4)(E). The filing of the motion prompted Nordock's payment of Brookman's fees. Thus, that aspect of Systems' motion has been rendered moot.

Nordock has sent Bero a check for $4,000.00. However, it asserts that Bero's invoice for $17,007.00 is unreasonable because little, if any, of his time spent preparing for the deposition is recoverable under Rule 26; the fees requested by Bero are not recoverable because compliance with document requests was required under Rule 26(a)(2)(B); and Bero's invoice fails to provide sufficient detail to determine whether the time billed was reasonable.

As Judge Milton Shadur observed, “[t]here are mixed judicial rulings” on the recoverability of an expert's preparation time. Waters v. City of Chicago, 526 F.Supp.2d 899, 900 (N.D.Ill.2007); see also, 8A Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice & Procedure § 2034 (3d ed. 2010). However, Halasa v. ITT Educ. Servs., Inc., 690 F.3d 844, 852 (7th Cir.2012), upheld an award under Rule 26(b)(4)(E)(i) that included preparation time. See also Chambers v. Ingram, 858 F.2d 351, 360–61 (7th Cir.1988). Therefore, the Court will allow preparation time.

The next question is whether the claimed amount is “reasonable.” Fed.R.Civ.P. 26(b)(4)(C). The legal authority determining the reasonableness of expert fees is sparse. See 8A Wright, Miller, & Marcus, supra, § 2034. Courts that have applied the principle frequently have focused on the “ratio of preparation time to deposition time.” Collins v. Village of Woodridge, 197 F.R.D. 354, 358 (N.D.Ill.1999). In some circumstances—for example, a short deposition of a minor fact witness—“the ‘reasonable’ compensation for deposition preparation time [may] be zero or a nominal amount.” Id. Judges in this circuit have approved compensation at a 1.5:1 or even a 3:1 ratio. See Nilssen v. Osram Sylvania, Inc., No. 01 C 3585, 2007 WL 257711, at *5 (N.D.Ill. Jan. 23, 2007) (approving 3:1 ratio “based on the extensive document review required, the complexity of the issues, and the breadth of the expert's report”); See Collins, 197 F.R.D. at 358 (rejecting a 3:1 ratio, but approving a 1.5:1 ratio in view of, inter alia, the “unusually extensive” amount of material that the experts reviewed in preparation for deposition).

The 38–page Bero report, with an additional 66 pages of tables, is highly detailed and contains alternative calculations for patent infringement damages. The report indicates that he reviewed extensive materials in preparing the report. ( See Bero Report, 1 & Attach. 1 (5 pages)). (ECF No. 37–1 (SEALED).) Given the complexity of Bero's report, the Court approves a 3:1 ratio for preparation time. Thus, for Bero's three-hour deposition, he may claim nine hours of preparation time.

With respect to the amount of the fee, in general, courts determine the reasonableness of an expert's fee by considering the following factors:

(1) the expert's area of expertise; (2) the education and training required to provide the expert insight that is sought; (3) the prevailing rates of other comparably respected available experts; (4) the nature, quality, and complexity of the discovery responses provided; (5) the fee actually being charged to the party that retained the expert; (6) fees traditionally charged by the expert on related matters; and (7) any other factor likely to be of assistance to the court in balancing the interests implicated by Rule 26.Se–Kure Controls, Inc. v. Vanguard Prods. Group, Inc., 873 F.Supp.2d 939, 955 (N.D.Ill.2012) (collecting cases).

Neither party addressed these factors. However, the Bero report includes the following information: Bero is certified public accountant accredited in business valuation, a certified valuation analyst, and Managing Director of The BERO Group. Bero received a Bachelor of Business Administration from the University of Wisconsin–Madison in 1986. He has analyzed economic damages and accounting and financial issues in a variety of litigation matters concerning patent infringement, trademark infringement, copyright infringement, trade secrets, breach of contract, dealership disputes and construction disputes. Bero's hourly rate is $475.00, the rate at which he has billed Systems for his services. Based on the foregoing, the Court approves Bero's $475.00 rate for 12 hours which equals $5,700.00

Thus, Systems' motion is granted to the extent that Nordock must pay an additional $1,700.00 to Bero by the stated deadline. Next, the Court addresses the two motions to strike Brookman as an expert witness.

BROOKMAN AS AN EXPERT WITNESS—TRADE DRESS AND UNFAIR COMPETITION

Nordock seeks an order barring Systems from calling Brookman as an expert witness on trade dress and unfair competition and excluding his report (ECF No. 54–3) for failure to disclose it by the June 20, 2012, deadline set by the scheduling order, and imposing sanctions pursuant to Rule 37(c) of the Federal Rules of Civil Procedure. (ECF No. 52.) Systems responds that Brookman's trade dress and unfair competition report was timely disclosed as a rebuttal report because Systems does not bear the burden of proof on the trade dress issues.

Federal Rule of Civil Procedure 26 requires an expert witness to give “a complete statement of all opinions the witness will express and the basis and reasons for them” in the expert's initial report. Fed.R.Civ.P. 26(a)(2)(B)(i). The Rule also permits experts to submit rebuttal reports, but limits the contents of those reports to “evidence [that] is intended solely to contradict or rebut evidence on the same subject matter identified” in another party's expert witness report. Fed.R.Civ.P. 26(a)(2)(D)(ii). Stated somewhat differently: A party presents its arguments as to the issues for which it has the burden of proof in its initial expert report. A rebuttal expert report presents expert opinions refuting the arguments made by the opposing party in its initial expert report.

The parties' combined joint status report and discovery plan states “The parties agree that initial [e]xpert reports on matters for which the parties bear the burden of proof will be served by June 20, 2012, that rebuttal expert reports shall be served by July 20, 2012, and that expert discovery shall be completed by August 20, 2012.” (emphasis added.) (ECF No. 12.) That agreement will be enforced.

In this action, as the proponent of the trade dress and unfair competition claim, Nordock bears the burden of establishing the elements of that claim. See Thomas & Betts Corp. v. Panduit Corp., 138 F.3d 277, 291 (7th Cir.1998). Nordock's technical expert, Steven Carl Visser (“Visser”) opined about the functional versus ornamental dichotomy which is also an element of Nordock's unfair competition claim. ( See Visser Report, 80.) (Dkt. 26–1, 81.) While the two standards are not identical, they overlap. (See Ex. 1, Nordock's Reply Re: Mot. Strike Brookman Trade Dress and Unfair Competition (Adam L. Brookman, Trademark Law: Protection, Enforcement and Licensing, (Wolters Kluwer Law and Business, 2012 Supp.), 6–61.) (ECF No. 78–1.) Therefore, to the extent that Visser expressed opinions about matters that overlap between both design patent claims and unfair competition claims, Brookman's report (ECF 54–3) is a rebuttal. Brookman's entire report regarding trade dress will not be excluded as being untimely, and no sanctions...