Nutramax Labs., Inc. v. Manna Pro Prods., LLC
| Decision Date | 14 August 2017 |
| Docket Number | Civil Action No.: 0:16-cv-01255-JMC |
| Parties | Nutramax Laboratories, Inc., and Nutramax Laboratories Veterinary Services, Inc., Plaintiffs, v. Manna Pro Products, LLC; Nutri-Vet, Wellness, LLC; and 21st Century Animal HealthCare, LLC, Defendants. |
| Court | U.S. District Court — District of South Carolina |
This matter is before the court on the renewed motion for attorneys' fees and disgorgement of profits filed by Plaintiffs Nutramax Laboratories, Inc., and Nutramax Laboratories Veterinary Services, Inc., (together, "Nutramax"). (ECF No. 60.) For the reasons set forth below, the court DENIES Nutramax's renewed motion.
Nutramax filed this trademark infringement action against Defendants Manna Pro Products, LLC, Nutri-Vet Wellness, LLC, and 21st Century Animal HealthCare, LLC ("21st Century") (collectively "Defendants") "alleging that Defendants' 'Petnology Essentials' product line of health supplements for pets infringed on Nutramax's trademark by employing copycat packaging and using improper comparisons to Nutramax's Cosequin product line and that these actions violated South Carolina law on unfair competition." (ECF No. 44 (citing ECF No. 8).) On July 8, 2016, the parties submitted a Joint Stipulation of Settlement and Order ("settlement order"), along with a consent order, dismissing the case under the terms of the settlement order, both of which the court endorsed and entered the same day. (ECF Nos. 31, 32.) In the settlement order, Defendants, including 21st Century, agreed to, among other things, cease the marketing, distribution, and sale of certain offending products described within the settlement order in exchange for Nutramax's agreement to release Defendants from liability for certain conduct specified in the settlement order. (See ECF No. 32.) The parties expressly agreed that the court retained jurisdiction to enforce the terms of the settlement order and that, "in any motion practice or other proceeding initiated to enforce the terms of [the settlement order,] the prevailing party shall be entitled to its reasonable attorneys' fees." (Id. ¶¶ 6, 11, 12.)
On August 30, 2016, Nutramax filed a motion asking the court to find 21st Century in contempt, asserting that 21st Century had failed to comply with the settlement order by "continuing to advertise and sell its '21st century Essential Pet Joint Health' ("Essential Pet") product line of health supplements pets, which includes on its packaging the phrase 'compare to the active ingredients in Cosequin® [products].'" (ECF No. 44 at 3 (citing ECF Nos. 34-1 at 3-5; ECF No. 34-3).) After holding a motion hearing on November 29, 2016 (ECF No. 43), to allow the parties to clarify their arguments, the court entered an order (the "contempt order") on December 1, 2016, granting in part Nutramax's motion to the extent it sought "a finding of contempt, an award of attorneys' fees, and an order of disgorgement." (ECF No. 44 at 20.) Accordingly, the court ordered 21st Century to (1) "disgorge to Nutramax its net profits from all sales, on or after July 8, 2016, of products within its Essential Pet line that employ or employed packaging with comparative advertising containing the word Cosequin or that are sold or were sold through a website that employed comparative advertising containing the word Cosequin at the time of the sale" and (2) "pay to Nutramax reasonable attorneys' fees associated with the prosecution of the [contempt] motion." (Id. at 21.) Anticipating a dispute on the issue, the court also ordered 21st Century to "file with the court and serve on Nutramax a statement disclosing all of its sales and net profits . . . thatare subject to th[e] disgorgement order and explaining how such net profits were calculated" before attempting to disgorge the profits. (Id.)
In compliance with the contempt order, 21st Century, on January 6, 2017, filed a reply to the order setting forth its calculation of the net profits from the sale of the offending products during the relevant period that were subject to disgorgement. (See ECF No. 46.) 21st Century asserted that the net profits to be disgorged amounted to $10,912.00. (See id. at 3.) Thereafter, Nutramax filed an objection to 21st Century's reply to the contempt order and asserted that, based on the documentation provided by 21st Century, the net profits subject to disgorgement amounted to $94,452.08. (See ECF No. 49.) By an August 2, 2017 order, the court found that the amount of net profits subject to disgorgement under its previous contempt order amounted to $11,130.14 and ordered 21st Century to disgorge that amount to Nutramax. (See ECF No. 64.)
While the parties' dispute over the amount of net profits to be disgorged remained pending, Nutramax filed its first motion for attorneys' fees and for disgorgement of profits (ECF No. 50), seeking $55,506.00 "to compensate it for its actual, out-of-pocket attorneys' fees incurred in connection with the Contempt Proceeding" (id. at 7). In support of its motion, Nutramax attached the affidavit of one of the attorneys representing it in this matter, Morgan T. Nickerson, a partner with K&L Gates LLP in Boston, Massachusetts. (See ECF No. 50-1.) In the affidavit, Nickerson, relying on a number of invoices, set forth the rates and hours of the attorneys who worked on the contempt proceeding and declared that, "[b]ased on [his] experience, [his] interaction with other firms and attorneys around South Carolina and the country, and [his] familiarity with rates charged for this type of motion practice, [he] believe[d] that K&L Gates' billing rates [were] reasonable and in keeping with the rates charged by other attorneys and law firms of comparable experience, reputations and skill in similar cases for similar clients" and that "the time expended by . . . K&LGates personnel on the Contempt Proceeding . . . [was] reasonable." (Id. at 2-5.) In response to the motion, 21st Century argued, among other things, that, under Fourth Circuit precedent, an affidavit from the fee applicant's attorney, without more, is insufficient for assessing whether the fees sought are reasonable. (See ECF No. 53 at 6.)
The court agreed with 21st Century that Nickerson's affidavit was insufficient. (See ECF No. 59.) The court explained that, in assessing the reasonableness of attorneys' fees, courts in the Fourth Circuit begin by determining the lodestar figure, which is calculated by multiplying the number of reasonable hours by a reasonable rate. (Id. at 6-7 (citing Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th Cir. 2009); Grissom v. The Mills Corp., 549 F.3d 313, 310 (4th Cir. 2008)).) The court further explained that, in order to determine the reasonable rate, the fee applicant bears the burden of producing specific evidence of the prevailing rate in the relevant community for the type of work for which it seeks an award. (Id. at 7 (citing Plyler v. Evatt, 902 F.2d 273, 277 (4th Cir. 1990)).) Reviewing Nutramax's motion, the court first determined that Nutramax had not shown that the "relevant community" was Boston rather than South Carolina. (See id. at 7-8 (citing Rum Creek Coal Sales, Inc. v. Caperton, 31 F.3d 169, 175 (4th Cir. 1994); Nat'l Wildlife Fed'n v. Hanson, 859 F.2d 313, 317 (4th Cir. 1988)).) The court next determined that an affidavit from Nickerson—a Boston attorney representing Nutramax in the contempt proceedings—was not satisfactory specific evidence of the prevailing rate in the relevant community for the type of work involved. (See id. at 8 (citing Robinson, 560 F.3d at 245).) Noting Nutramax's assertion that it would provide satisfactory evidence, the court denied the motion without prejudice in order to "allow Nutramax the opportunity to demonstrate that the requested hourly rates are reasonable" in a renewed motion. (Id. at 8.)
On May 2, 2017, while the court's decision as to the amount of net profits to be disgorged yet remained pending, Nutramax filed the instant renewed motion for attorneys' fees and disgorgement of profits. (See ECF No. 60.) In addition to another affidavit by Nickerson (ECF No. 60-1), Nutramax submits two other evidentiary items in support of its renewed motion. First, Nutramax submits an affidavit from John C. McElwaine, the managing partner of Nelson Mullins Riley & Scarborough LLP's Charleston, South Carolina office. (ECF No. 60-2.) McElwaine's affidavit states that he has practiced law in South Carolina for 22 years, focusing mainly on intellectual property and technology litigation. (See id. at 2.) Much of the affidavit well attests to McElwaine's considerable experience as an intellectual property attorney, including his work in other matters with the attorneys representing Nutramax here. (See id. at 2-3.) In the affidavit's penultimate paragraph, McElwaine opines that "[b]ased on [his] more than 20 years of experience practicing as an intellectual property attorney specializing in trademark law in South Carolina, . . . [K&L Gates'] hourly rates are in line with the prevailing rates in Columbia, South Carolina for similar services by lawyers of reasonably comparable skill, experience, and national reputation." (Id. at 5.)
Second, Nutramax submits a report issued in 2015 by the American Intellectual Property Law Association ("AIPLA"). (ECF No. 60-3.) The AIPLA report details the results of a survey of intellectual property lawyers across the United States. (Id.) Nutramax points to several aspects of the AIPLA report. It first points out that, in 2014, partners practicing intellectual property law in private firms in the "Other Southeast," region, which includes all of Florida, Georgia, North Carolina, and South Carolina, except for major metropolitan areas (Miami, Fort Lauderdale, and West Palm Beach, Florida; Raleigh, Durham, Greensboro, Wintson-Salem, and Charlotte, North Carolina; and Atlanta, Georgia), billed at an average rate of...
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