Ohio Willow Wood Co. v. Alps S., LLC

• Decision Date: 28 May 2019
• Docket Number: Civil Action 2:04-cv-01223
• Parties: THE OHIO WILLOW WOOD COMPANY, Plaintiff, v. ALPS SOUTH, LLC, Defendant.
• Court: U.S. District Court — Southern District of Ohio

THE OHIO WILLOW WOOD COMPANY, Plaintiff, v. ALPS SOUTH, LLC, Defendant.

Civil Action 2:04-cv-01223

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO EASTERN DIVISION

May 28, 2019

Chief Judge Edmund A. Sargus, Jr.

Chief Magistrate Judge Elizabeth P. Deavers

REPORT AND RECOMMENDATION

This matter is before the Court for a Report and Recommendation of Defendant's former counsel, Shumaker, Loop, & Kendrick, LLP's ("Shumaker") request for attorneys' fees. For the following reasons, the Undersigned RECOMMENDS that Shumaker's request be GRANTED and Shumaker's attorneys' fees be found reasonable and awarded. The Undersigned, therefore, RECOMMENDS the imposition of a $639,946.18 attorney charging lien on any settlement funds paid to Defendant Alps South, LLC ("Alps") in this matter.

I.

Plaintiff, The Ohio Willow Wood Company ("OWW") initiated this case on December 27, 2004, by filing a Complaint. (ECF No. 1.) OWW filed an Amended Complaint on November 18, 2011. (ECF No. 120.) OWW accused Defendant Alps of infringing one of its patents, U.S. Patent No. 5,830,237 (the '237 patent). (Id. at ¶ 9.) Alps, in turn, brought a counterclaim alleging, among other things, that OWW had procured the '237 patent by inequitable conduct. (ECF No. 127 at ¶¶ 92-93.) On August 10, 2012, the Court ruled on the parties' cross-motions for summary judgment, holding that the asserted claims of the '237 patent were invalid and that OWW had not engaged in inequitable conduct. (ECF No. 209.) Plaintiff and Defendant each appealed to the Federal Circuit, which affirmed the Court's decision that the asserted claims of the '237 patent were invalid but reversed the Court on its decision that OWW had not engaged in inequitable conduct. (ECF No. 226.) The case was remanded. (Id.)

Following a bench trial on the issue of OWW's inequitable conduct, the Court ruled in Defendant Alps' favor. (ECF Nos. 278 & 279.) The Court found that OWW engaged in inequitable conduct during the second reexamination proceedings. (Id.) The Court further found that because this was an "exceptional" case under 35 U.S.C. § 285, Defendant Alps was entitled to its attorneys' fees incurred since September 30, 2011. (Id.) OWW again appealed the Court's judgment to the Federal Circuit, which affirmed the Court's decision in February 2016. (ECF No. 290.) The case was again remanded, with the only remaining issue being the determination of the amount of attorneys' fees owed to Defendant Alps. (ECF No. 297.) Prior to a decision from the Court on this issue, OWW and Alps settled the case and filed a stipulated dismissal. (ECF No. 305.)

On July 11, 2016, Defendant's former counsel, Shumaker, moved for an Attorney Charging Lien. (ECF No. 299.) Shumaker represented Defendant Alps from 2008 until December 16, 2015 when Alps discharged the firm. (Id. at pg. 1-2.) Through the charging lien, Shumaker seeks to recover from Alps unpaid fees for legal services and unreimbursed expenses. (Id.) Shumaker represents that the reasonable value of the legal services it provided to Defendant is $1,236,803.58, of which $614,893.08 remains unpaid. (Id. at pg. 2.) Shumaker further represents that it advanced $64,744.42 in expenses for this case, of which $25,053.10 is still unreimbursed. (Id.) Defendant filed a Response in Opposition to the Motion on August 4,2016, contending that the $700,539.84 already paid is adequate compensation for Shumaker's legal services. (ECF No. 300.) On August 17, 2016, Shumaker filed its Reply. (ECF No. 302.) The Court granted Shumaker's Motion on September 19, 2017 and ordered the imposition of a $639,946.18 charging lien on any settlement funds paid to Alps in this matter. (ECF No. 306.) The lien covered the amount Alps owed Shumaker in unpaid legal fees ($614, 893.08) and unreimbursed expenses ($25,053.10). (Id.)

On October 19, 2017, Defendant moved for reconsideration of the Court's Order. (ECF No. 307.) Shumaker filed a Response in Opposition on November 6, 2017. (ECF No. 310.) On February 14, 2018, the Court granted Defendant's Motion for Reconsideration in part, granting Defendant's request that the Court hold an evidentiary hearing¹ and ordered Shumaker to file with the Court the invoice and billing information supporting its charging lien request. (ECF No. 311.) On June 15, 2018, Chief Judge Edmund A. Sargus, Jr. referred the evidentiary hearing on Shumaker's request for attorneys' fees and expenses to the Undersigned pursuant to 28 U.S.C. § 636(b). (ECF No. 320.) The Undersigned held the evidentiary hearing on October 30, 2018 and October 31, 2018. At the close of the evidentiary hearing, the Undersigned requested Defendant and Shumaker to submit briefs with respect to the proper standard to apply to Shumaker'srequest for attorneys' fees. Both Defendant and Shumaker submitted briefs on December 4, 2018. (ECF Nos. 332 & 333.)

II.

"An attorneys' charging lien is an equitable right to be paid for his [or her] services out of the proceeds of the judgment obtained by his [or her] labor and skill." Exact Software v. Infocon Systems, Inc., No. 3:03-cv-7183, 2011 WL 2490594, at *2 (N.D. Ohio June 22, 2011) (internal quotations and citations omitted). Under Ohio common law, attorneys have a right to assert a lien against a judgment they obtain on behalf of their client. Filius v. Outdoor Sports Headquarters, Inc., No. C-3-90-358, 1995 WL 1612532, at *2 (S.D. Ohio May 18, 1995); Garrett v. City of Sandusky, 2004-Ohio-2582, ¶23 (6th Dist.) ("Ohio courts recognize an attorney's equitable right to enforce a lien on a client's judgment, decree or award, for payment of attorney fees earned in the prosecution of litigation to judgment, and will lend their aid to maintain and enforce such a lien.") (citation omitted). The Ohio Supreme Court outlined the concept of an attorney charging lien in Cohen v. Goldberger, 141 N.E. 656 (Ohio 1923). As the court explained:

The right of an attorney to payment of fees earned in the prosecution of litigation to judgment, though usually denominated a lien, rests on the equity of such attorney to be paid out of the judgment by him obtained, and is upheld on the theory that his services and skill created the fund.

Id. at Syllabus, ¶ 1. Although Cohen describes a lien attached to a judgment, courts have not interpreted this language as prohibiting the attachment of a lien to settlement proceeds. See, e.g., Filius, 1995 WL 1612532, at *2-3; Devis v. Pineview Ct. Condo. Ass'n, 2015-Ohio-2704, ¶¶ 5, 11. Nor have courts interpreted Cohen's language as prohibiting the attachment of a lien when an attorney is discharged before the lawsuit is settled (or final judgment is entered in the case). See, e.g., Filius, 1995 WL 1612532, at *2; Cuyahoga Cnty. Bd. of Comm'rs v. Maloof Props.,Ltd., 968 N.E.2d 602, 715-16 (8th Dist. Ohio 2012). Additional factors that Ohio courts have considered when deciding whether to impose a charging lien include the following:

(1) the right of the client to be heard on the merits; (2) the right of an attorney to invoke the equitable jurisdiction of the courts to protect his fee for services rendered; (3) the elimination of unnecessary and duplicative litigation; (4) the opportunity for the client to obtain counsel to litigate the claim for attorney fees; (5) the propriety of an order as opposed to a judgment; (6) a forum for the presentation of witnesses, if necessary; and (7) the equitable nature of the proceeding.

Fire Prot. Res., Inc. v. Johnson Fire Prot. Co., 594 N.E.2d 146, 149-50 (6th Dist. Ohio 1991). Ultimately though, the decision to impose an attorney charging lien is based on the facts and circumstances of the particular case and is left to the sound discretion of the court. Kerger & Hartman, LLC v. Ajami, 54 N.E.3d 682, 686 (6th Dist. Ohio 2015).

III.

A. Cohen Analysis

The Court has already undertaken an analysis of whether Shumaker's request that an attorney charging lien be placed on any settlement funds obtained by Alps satisfies the requirements outlined in Cohen and the additional factors analyzed by Ohio courts. (ECF No. 306, at pg. 4-6.) The Court found as follows on the issue:

Shumaker requests that an attorney charging lien be placed on any settlement funds obtained by Alps. As noted above, Shumaker litigated the case to judgment. And given Shumaker's extensive involvement in the case, the Court concludes that the judgment [ECF No. 279] was procured through Shumaker's services and skill. Shumaker represented Alps from 2008 until December 16, 2015. (See Mot. at 1-2 [ECF No. 299].) During that time, Shumaker drafted a motion for summary judgment, litigated an appeal to the Federal Circuit, tried the inequitable conduct portion of the case before this Court, obtained a judgment for Alps, and defended that judgment in the second appeal to the Federal Circuit. (See id. at 2-3.)

Because the requirements outlined in Cohen are met, the Court considers the additional factors analyzed by Ohio courts. See Fire Prot. Res., 72 Ohio App. 3d at 210-11. Alps obtained new counsel and has presented arguments on the merits of Shumaker's Motion for an Attorney Charging Lien. (See Mem. in Opp'n at 1-3[ECF No. 300].) Shumaker has not engaged in inequitable conduct that would cause the Court to question whether Shumaker should be permitted to invoke the Court's equitable jurisdiction. Imposing an attorney charging lien on the settlement funds might (depending on the settlement amount) eliminate the need for Shumaker to file a separate suit against Alps for the recovery of attorneys' fees and expenses. Neither party has objected to the propriety of an order as opposed to a judgment regarding the unpaid attorneys' fees and expenses. Nor has either party objected to this Court being an appropriate forum for the presentation of witnesses, if necessary.

Alps argues that the equities in this case do not favor the imposition of an attorney charging lien and that its partial payment of the attorneys' fees and expenses represents adequate

...