US Industries, Inc. v. Norton Co.

• Decision Date: 10 January 1984
• Docket Number: No. 71-CV-359.,71-CV-359.
• Parties: U.S. INDUSTRIES, INC. and Dresser Industries, Inc., Plaintiffs, v. NORTON COMPANY, Defendant.
• Court: U.S. District Court — Northern District of New York

578 F. Supp. 1561

U.S. INDUSTRIES, INC. and Dresser Industries, Inc., Plaintiffs, v. NORTON COMPANY, Defendant.

No. 71-CV-359.

United States District Court, N.D. New York.

January 10, 1984.

COPYRIGHT MATERIAL OMITTED

Darby & Darby, P.C., William F. Dudine, Jr., David R. Francescani, New York City, for plaintiffs; Lynn, Lynn & Miller, Richard J. Miller, Albany, N.Y., of counsel.

Allen Kirkpatrick, Cushman, Darby & Cushman, Washington, D.C., for defendant; Kohn, Bookstein & Karp, New York City, Richard A. Kohn, Albany, N.Y., of counsel.

MEMORANDUM-DECISION and ORDER

JAMES T. FOLEY, Senior District Judge.

This prolonged patent-antitrust action should be nearing its end. The complaint was filed August 12, 1971. The issues were tried to the court for eight trial days, September 19 to September 29, 1978. In an unpublished fifty-three page decision dated October 22, 1980 findings of fact and conclusions of law were made and explained. The decision described the case as an unusual one, of complex and wide-ranging issues, with technical and scientific evidence presented and developed at the trial by able and experienced counsel. The rulings therein were that the patent in issue was invalid as obvious, and also invalid and unenforceable by reason of the defendant's misconduct during the prosecution of the patent in the Patent office. The antitrust and unfair competition claims of the plaintiffs were dismissed, and their request for injunctive relief against the defendant's foreign patents was denied. The case was determined to be an "exceptional" one, and under the provisions of 35 U.S.C. § 285, attorney's fees were awarded to the plaintiffs. Thereafter, by memorandum-decision and order dated December 29, 1981, I outlined the scope of the attorney fees award, holding adverse to the contention of the plaintiffs, that the plaintiffs were entitled to fee award only on the patent claims, and not on the antitrust, unfair competition, and injunctive relief claims. By brief order and judgment, dated December 13, 1982, a Panel of the Court of Appeals, Second Circuit, upheld the above rulings. 714 F.2d 119. The plaintiffs had appealed the antitrust and unfair competition dismissals, and the defendant cross-appealed the patent invalidity, patent fraud, and attorney fees award.

The attorneys for the plaintiffs (hereinafter Dresser) have filed two applications for attorneys' fees, disbursements and costs. The first is dated April 29, 1982, before the Second Circuit affirmance of December 13, 1982, and thereafter the second supplemental application dated May 23, 1983. Extensive briefing has been submitted in stages on these applications with oral argument hearings held on the record in Albany on June 20, 1983 and November 7, 1983. After the June 20, 1983 hearing, at my suggestion, substantial amounts of costs and disbursements were discussed and later settled by agreement between the parties. Otherwise, intense disagreement continues on numerous grounds and challenges raised by the defendant Norton to the two itemized and detailed applications filed by the attorneys for the plaintiffs. The amounts of attorneys' fees requested are computed in the final submission as $309,143.98 in the first application, and $104,866.00 in the second application for a total of $414,009.98. The first application covers legal services from 1970 to approximately 1981, the date of this court's judgment, and the second application covers the subsequent period to disposition of the appeal and for legal services in preparation of the first fee application. A separate issue to be decided is the reimbursement to the plaintiffs of an expert witness in the amount of $35,440.00 plus $75.25 disbursements.

There has been considerable judicial writing in the federal courts on attorney fee problems with a marked increase in recent years. The table of federal cases set forth in the briefs submitted herein number more than a hundred citations. Years ago such determinations did not seem as difficult and time consuming. See In Re Niagara Hudson Power Corp., 114 F.Supp. 683 (N.D.N.Y.1953), aff'd, 219 F.2d 859 (2d Cir. 1955). Fortunately, there is good guidance for solution of many of the disputes herein in two recent important rulings in regard to award of attorney fees made by the United States Supreme Court and the Court of Appeals, Second Circuit. Those authorities are Hensley v. Eckerhart, ___ U.S. ___, 103 S.Ct. 1933, 76 L.Ed.2d 40 (May 16, 1983), and N.Y. State Association for Retarded Children, Inc. v. Carey, 711 F.2d 1136 (2d Cir.1983), petition for rehearing en banc denied, August 2, 1983. The Second Circuit Panel concurring opinions in N.Y. State Association for Retarded Children, supra, pointed out that more enlightenment and clarification on attorney fee hourly rates and bonus factors may be forthcoming from the Supreme Court in Stenson v. Blum, 512 F.Supp. 680 (S.D.N. Y.), aff'd sub nom., Blum v. Stenson, 671 F.2d 493 (2d Cir.1981) (unpublished opinion), cert. granted, ___ U.S. ___, 103 S.Ct. 2426, 77 L.Ed.2d 1314 (1983).

Hensley v. Eckerhart, 103 S.Ct. at 1941, which is the dominant authority for such issues, cautioned that a request for attorneys' fees should not result in a second major litigation. The substantial submissions in this instance with practically complete legal disagreement approaches that description. I shall try not to unduly aggrandize the problems, but shall attempt to follow the Hensley recommendation to provide a concise but clear explanation of the reasons for the fee award and rulings in regard to the Norton challenges. See Id. Hensley held that the amount of the fee is to be determined on the facts of each case, and adopted for consideration the twelve factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974). It also held that the most useful starting point to determine the fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. 103 S.Ct. at 1937, n. 3, 1939. The Court of Appeals, Second Circuit, describes this procedure as the establishment of a "lodestar" figure. Cohen v. West Haven Board of Police Commissioners, 638 F.2d 496, 505 (2d Cir.1980) (citing City of Detroit v. Grinnell Corp., 560 F.2d 1093, 1098 (2d Cir.1977) (Grinnell II)). Finally, Norton argues that inasmuch as the standards set forth in Hensley and in many other cases relied upon by plaintiffs were civil rights actions with the award of fees under 42 U.S.C. § 1988, they should not be applicable in this patent situation. The Hensley opinion forecloses this argument with the statement that the standards are generally applicable in all cases in which Congress has authorized an award of fees to a "prevailing party". Hensley, supra 103 S.Ct. at 1939 n. 7.

The first challenge of Norton is that the total amount of attorneys' fees claimed by Dresser is clearly excessive in that there is a lack of categorization of the nature of services rendered and the time spent by the particular attorneys named in the items. That the number of hours and the hourly rates billed for services are excessive, and the services rendered were often duplicative. These challenges, in my judgment, were greatly weakened after reciprocal discovery was to be requested by plaintiffs of the Norton attorneys' billings by the letter of Attorney Kirkpatrick to Attorney Dudine of July 7, 1983. (Ex. E, pls. Reply Brief of October 24, 1983). The letter stated that the amounts billed, the billing rates, and the character of services as stated in the applications will be uncontradicted as a matter of fact with the reservation that certain designated issues would remain open and arguable as a matter of law.

Significant and important as this concession may be, I find other independent and adequate support to uphold the categorization of legal services, the hourly rates charged except for reductions in the fee applications and for local counsel, and hourly time expended as set forth in the applications. The litigation covers a thirteen-year period and the docket entries of the Clerk of the Court (Pl.Ex. 1, November 7, 1983 hearing) indicates the varied and sustained legal efforts that were necessary and had to be undertaken in an unusual and complex case. The hourly rates of lead Attorney Dudine began at $50.00 an hour in 1971, increased in reasonable amounts over the years, reaching $150.00 in 1981, and $180.00 in March 1982. Thus, there is satisfactory compliance with the historic rate formula recommended in N.Y. Association for Retarded Children, Inc. v. Carey, supra, 711 F.2d at 1152-1153, for cases that extend over a lengthy period of years. From my contact and observations over the years, the complexity and development of the unusual issues not only justified but compelled the staffing throughout the litigation of several attorneys for both sides. N.Y. Association for Retarded Children, Inc. v. Carey, supra, states also that prevailing parties are not barred as a matter of law from receiving fees for sending additional lawyers to depositions and trials, or from fees for background research. Id. at 1146. Also, in regard to excessiveness, Norton contends that the hourly rate should be fixed by the Court at the normal hourly rates prevailing for legal services in the City of Albany. This position of Norton is clearly untenable. In the affidavit supporting the first fee application, Darby and Darby, plaintiffs' attorneys, stated that the hourly billing rates were comparable to the rates of the top 25% of patent attorneys in New York City. This difficult case undoubtedly had to have the services of patent attorney specialists in order to analyze, prepare and present the issues competently to a court. The hourly billing rates for patent attorneys in New York City are set forth in the American Patent Law Association (APLA), Report of Economic Survey, attached to the first fee application as Exhibit F. The hourly rates...