Rustic Retreats Log Homes, Inc. v. Pioneer Log Homes of B.C. Inc.
| Decision Date | 22 March 2022 |
| Docket Number | 19-CV-1614 |
| Parties | RUSTIC RETREATS LOG HOMES, INC. d/b/a Pioneer Log Homes Midwest, Plaintiff, v. PIONEER LOG HOMES OF BRITISH COLUMBIA INC. and PIONEER LOG HOMES OF BRITISH COLUMBIA, LTD., Defendants. |
| Court | U.S. District Court — Eastern District of Wisconsin |
DECISION AND ORDER
Rustic Retreats Log Homes, Inc., d/b/a Pioneer Log Homes Midwest (“Rustic Retreats”) sued Pioneer Log Homes of British Columbia, Inc. and Pioneer Log Homes of British Columbia, Ltd. (collectively “Pioneer”) for breach of the parties' distributorship agreement. (Docket # 1-1 at 4-12.) In response, Pioneer asserted several counterclaims against Rustic Retreats, including misappropriation of trade secrets in violation of the Wisconsin Uniform Trade Secrets Act. (Docket # 14.) A jury trial was held; on July 23, 2021, the jury returned a verdict in favor of Rustic Retreats on its breach of contract claim and in favor of Pioneer on its misappropriation of trade secrets claim. (Docket # 154.)
Presently before me are the parties' post-trial motions for attorney's fees. For the reasons explained below, both motions are denied.
At a final pretrial conference held on June 24, 2021, I heard arguments on the parties' motions in limine. In its Motion in Limine No. 1, Rustic Retreats sought to preclude Pioneer from putting forth evidence of damages at trial due to Pioneer's failure to provide a computation of its damages or provide proof of damages during discovery. In response to Rustic Retreats' arguments, Pioneer asserted that Rustic Retreats' untimely production of discovery precluded timely disclosure of its claimed damages and that two of its employees, Bryan Reid Jr. and Gary Crosina, were qualified to testify as to Pioneer's claimed lost profits. Ultimately, I denied Rustic Retreats' Motion in Limine No. 1 but opened discovery for the limited purpose of deposing Bryan Reid Jr. and Gary Crosina on the issue of lost profits. (Docket # 127 at 1.)
On July 14, 2021, Rustic Retreats filed a Renewed Motion in Limine No. 1, arguing that Pioneer still had failed to produce any evidence of damages sufficient to support its counterclaims. (Docket # 132.) Specifically, Rustic Retreats contended that Reid and Crosina, who were deposed on July 12, 2021, failed to demonstrate adequate knowledge of lost profits to testify at trial. (Id.) After considering the parties' arguments, I granted the Renewed Motion in Limine No. 1 on July 20, 2021. (Docket # 157 at 2.)
Rustic Retreats now seeks $14, 220.00 in attorney's fees related to taking the depositions of Reid and Crosina, as well as preparing, filling, and prevailing on its Renewed Motion in Limine No. 1, pursuant to Federal Rules of Civil Procedure 26 and 37. (Docket # 163 at 4.) Rule 26 provides that a party must, as part of its initial disclosures, provide a computation of each category of its claimed damages, as well as the documents or other evidentiary material on which each computation is based. Fed.R.Civ.P. 26(a)(1)(A)(iii). The rule further requires a party to supplement or correct its initial disclosures either in a timely manner upon learning that the disclosure is incomplete or incorrect or as ordered by the court. Fed.R.Civ.P. 26(e)(1). Pursuant to Rule 37, if a party fails to provide information required by Rule 26(a) or Rule 26(e) “the party is not allowed to use that information . . . to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or harmless.” Fed.R.Civ.P. 37(c)(1). In addition to or instead of this sanction, on motion and after giving an opportunity to be heard, the court may order payment of the reasonable expenses, including attorney's fees, caused by the failure. Fed.R.Civ.P. 37(c)(1)(A).
Rustic Retreats asserts that Pioneer's failure to provide a computation of its damages or supplement its initial disclosures as required by Rule 26 caused it to incur the expenses associated with conducting the depositions of Reid and Crosina-who failed to provide any relevant or substantive testimony in support of Pioneer's claimed lost profits-and renewing its motion to preclude Pioneer from presenting evidence of damages. (Docket # 163 at 4-5.) Pioneer responds that Rustic Retreats' motion should be denied as procedurally improper and untimely. (Docket # 185 at 1-2.) Pioneer further argues that, in any event, it did properly supplement its Rule 26 disclosures, and assuming that it did not, the failure was substantially justified and harmless. (Id. at 3-5.)
Even assuming that Rustic Retreats' motion is procedurally proper and timely, I find that an award of attorney's fees under Rule 37 is not warranted. Again, Rule 37 provides that when a party fails to produce information required by Rule 26, the Court may order the payment of reasonable expenses caused by the failure. Under the circumstances of this case, the connection between the attorney's fees that Rustic Retreats seeks and Pioneer's alleged failures under Rule 26 is slightly attenuated. At the final pretrial conference, Rustic Retreats asserted prejudice from Pioneer's failure to timely provide computation of its damages, while Pioneer claimed that it was hindered by Rustic Retreats' lack of document production. Upon Pioneer's attestations that Reid and Crosina were qualified to provide lay witness testimony, Rustic Retreats' Motion in Limine No. 1 was denied and discovery reopened to depose these witnesses. Rustic Retreats laments that the depositions were largely a waste of time and necessitated the filing of the Renewed Motion in Limine No. 1. However, it was not unreasonable for Pioneer to believe that Reid and Crosina could testify as to lost profits. As explained in granting the Renewed Motion in Limine No. 1., Reid and Crosina, given their respective positions and responsibilities in the company, could have demonstrated the requisite knowledge to testify regarding Pioneer's alleged lost profits. Although Reid and Crosina at their depositions did not testify to the requisite knowledge regarding lost profits, allowing them to be deposed was not an unreasonable remedy. Given the circumstances, I decline to award Rustic Retreats attorney's fees pursuant to Rule 37.
Rustic Retreats also asserts that it is entitled to $1.597.60 in costs associated with its Renewed Motion in Limine No. 1 pursuant to Rule 54(d)(1) because it prevailed on the motion. (Docket # 163 at 6.) Pursuant to Rule 54, “costs-other than attorney's fees-should be allowed to the prevailing party.” Fed.R.Civ.P. 54(d)(1). The Seventh Circuit has defined “prevailing party” as “the party who prevails as to the substantial part of the litigation.” Testa v. Vill. of Mundelein, Ill., 89 F.3d 443, 447 (7th Cir. 1996). Rustic Retreats makes no argument as to how prevailing on the Renewed Motion in Limine No. 1 was a substantial part of the litigation. In Republic Tobacco Co. v. N. Atl. Trading Co., 481 F.3d 442, 446 (7th Cir. 2007), the Seventh Circuit considered whether a district court erred by awarding costs to a party who prevailed at the post-trial stage because the court reduced the jury's damages award. The court concluded that the court did err. It noted that courts and commentators alike have “interpreted ‘prevailing party' to mean “the party in whose favor judgment has been entered.” Id. (quoting Moore's Federal Practice § 54.101[3] (3d ed. 2006)). The court also cited authority that “a determination of who is the prevailing party for purposes of awarding costs should not depend on the position of the parties at each stage of the litigation but should be made when the controversy is finally decided.” 10 Wright, Miller, & Kane Federal Practice & Procedure § 2667 (3d ed. 2006). Thus, the court agreed that a “district court's award of costs should not depend on who wins the various battles preceding final judgment.” Id. In this case, both parties received a judgment in their favor and received similar monetary awards. In such “mixed outcome” cases, it is reasonable to have the parties bear their own costs. See Eagle F. v. Phyllis Schlafly's Am. Eagles, 498 F.Supp.3d 1024, 1034 (S.D. Ill. 2020) (collecting cases). Thus, Rustic Retreats' request for costs associated with its Renewed Motion in Limine No. 1 will be denied.
Pioneer moves for $177, 752.68 in attorney's fees and related nontaxable expenses incurred in pursuing its successful misappropriation of trade secrets counterclaim. Under the Wisconsin Uniform Trade Secrets Act, “[i]f a claim [of misappropriation] is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or a [misappropriation] is willful and deliberate, the court may award reasonable attorney fees to the prevailing party.” Wis.Stat. § 134.90(4)(c).
Pioneer argues that based on the plain language of the statute and the persuasive authority from other jurisdictions that have adopted the Uniform Trade Secrets Act, the court may award fees even in the case of a jury trial. (Docket # 170 at 2-3.) It further asserts that the record conclusively establishes Rustic Retreats' willful and deliberate misappropriation of its custom designs and pricing, warranting a fee award under the statute. (Id. at 4-7.) In response, Rustic Retreats argues that Pioneer is precluded from obtaining an award of attorney's fees under the statute because, in declining to award Pioneer punitive damages on its misappropriation of trade secrets claim, the jury expressly found that Rustic Retreats' misappropriation was not willful and malicious, and the evidence presented at trial does not support a...
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