Best Medical International, Inc. v. Eckert & Ziegler Nuclitec GMBH , 565 F. App'x 232 ( 2014 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-1708
BEST MEDICAL INTERNATIONAL, INC., a Virginia Corporation;
BEST VASCULAR, INC., a Delaware Corporation,
Plaintiffs – Appellants,
v.
ECKERT & ZIEGLER NUCLITEC GMBH, a German corporation,
successor to QSA Global GmbH,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Claude M. Hilton, Senior
District Judge. (1:10−cv−00617−CMH−IDD)
Argued: March 18, 2014 Decided: April 8, 2014
Before NIEMEYER, KING, and AGEE, Circuit Judges.
Affirmed by unpublished opinion. Judge Agee wrote the opinion,
in which Judge Niemeyer and Judge King joined.
ARGUED: James Michael Brady, BEST MEDICAL INTERNATIONAL, INC.,
Springfield, Virginia, for Appellants. Carl Dewayne Lonas,
MORAN REEVES & CONN PC, Richmond, Virginia, for Appellee. ON
BRIEF: Shawn R. Weingast, BEST MEDICAL INTERNATIONAL, INC.,
Springfield, Virginia, for Appellants. Matthew J. Hundley,
MORAN REEVES & CONN PC, Richmond, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
AGEE, Circuit Judge:
In a prior decision involving these parties, we affirmed
the district court’s judgment on the merits with the exception
of an award of attorneys’ fees and costs. See Best Med. Int’l,
Inc. v. Eckert & Ziegler Nuclitec GmbH, 505 F. App’x 281 (4th
Cir. 2013). We concluded that Eckert & Ziegler Nuclitec GmbH
(“EZN”) was the prevailing party in its litigation against Best
Medical International, Inc. and Best Vascular, Inc.
(collectively “Best”). However, we vacated that part of the
district court’s judgment awarding fees and costs to EZN because
that award did not reflect the required analysis under Johnson
v. Ga. Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.
1974). Accordingly, we remanded the attorneys’ fees and costs
portion of the prior judgment to the district court so that it
could undertake “a further analysis that [took] into account the
applicable Johnson factors.” Best Med., 505 F. App’x at 284.
In a thorough opinion, the district court conducted the
Johnson analysis and awarded EZN fees and costs. Best now
appeals that decision. For the reasons set forth below, we
affirm the district court’s judgment.
I.
We need not discuss all the specifics of the underlying
litigation, as that matter is fully covered in our prior
2
opinion. See Best Med., 505 F. App’x at 282-84. Nonetheless,
we briefly summarize certain facts that are useful to understand
the context in which the current appeal arises.
A.
In 1999, AEA Technology-QSQ GmbH (“QSA”) entered into a
manufacturing agreement with one of Best’s predecessors. Under
that agreement, QSA was to manufacture “sources” or “source
trains” of strontium and sell that product to Best’s
predecessor. At the end of that contract, Best was obligated to
decontaminate and decommission QSA’s manufacturing production
lines in Germany used to make these sources.
Best failed to decontaminate the manufacturing line as
agreed, so QSA sued to enforce the contractual covenant.
QSA and Best settled QSA’s suit under a 2008 Settlement
Agreement that provided Best was to complete its decontamination
work by a certain date and post a performance bond. Best was
also required to buy minimum orders of “source trains” that met
defined specifications. Furthermore, the Settlement Agreement
provided that “the prevailing party [would] be entitled to
recover . . . reasonable attorneys’ fees and costs incurred” in
“any litigation” “brought for breach” of the agreement. (J.A.
62.)
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The Settlement Agreement soon unraveled. Best did not
timely perform the required decontamination work, which caused
EZN (having acquired QSA in 2009) to notify Best in 2010 that it
planned to do the work at Best’s expense. Best also did not
post the performance bond. For its part, Best complained that
EZN was producing strontium sources that did not meet the
specifications found in the parties’ original manufacturing
agreement.
B.
When the Settlement Agreement broke down, Best initiated a
suit raising three principal complaints:
(1) that EZN was equitably estopped from conducting
the decontamination and decommission task and from
disposing of the production line in the course of
decontaminating and decommissioning the production
line; (2) that EZN breached the Settlement Agreement
by not cooperating with Best; and (3) that EZN
breached the Settlement Agreement by not providing
Best with source trains and sources that met the
specifications of the original Manufacturing
Agreement.
Best Med., 505 F. App’x at 283. Best sought certain injunctive
relief (including an injunction to stop EZN from breaking the
line down), sought “any monetary damages that [Best] sustained
as a result of [EZN]’s actions,” and sought a refund of payments
that it made for the supposedly “non-compliant” sources. (J.A.
4
51.) The parties agreed that Best’s requested relief would have
been valued at no less than $8 million.
In response, EZN filed a four-count compulsory counterclaim
under Federal Rule of Civil Procedure 13, alleging:
(1) that Best breached the Settlement Agreement by
failing to post a performance bond; (2) that Best
breached the Settlement Agreement by failing to
decontaminate and decommission the production line;
(3) that Best fraudulently induced EZN to enter into
the Settlement Agreement; and (4) that EZN should be
awarded declaratory relief stating that Best had
defaulted under the Settlement Agreement and that its
default relieved EZN from any obligation to dispose of
sources.
Best Med., 505 F. App’x at 283.
Upon cross motions for summary judgment, the district court
ruled largely for EZN. See Best Med. Int’l., Inc. v. Eckert &
Ziegler Nuclitec GmbH, No. 1:10-cv-617, 2011 WL 3951675 (E.D.
Va. Sept. 7, 2011). The court held that Best had not adequately
established any of its claims. Further, the court determined
that two of the four EZN counterclaims had not been shown. As
to EZN’s second counterclaim, the court concluded that Best had
defaulted on its obligation under the Settlement Agreement to
decommission and decontaminate the German production lines, but
found that any damages claim should be arbitrated -- under an
arbitration clause in the Settlement Agreement -- once EZN
completed its own cleanup efforts. The district court dismissed
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the declaratory judgment count as “moot” because the court had
“ruled on all points raised” in that count. Id. at *7.
EZN and Best each moved for attorneys’ fees and costs under
the Settlement Agreement. After determining that EZN was the
prevailing party, the district court proceeded to determine an
appropriate amount of attorneys’ fees and costs. The district
court began by detailing the appropriate analysis. First, the
district court recognized that it was to determine the lodestar
figure by multiplying the number of reasonable hours by a
reasonable fee. The district court acknowledged that it was to
assess reasonableness by looking to the twelve factors in
Johnson, 488 F.2d at 717-19. Second, the district court
correctly explained that it was to deduct fees for time spent on
unsuccessful claims. Third, the district court stated that it
was to award some percentage of the remaining fees to account
for the degree of success enjoyed by the prevailing party.
Applying this analysis, the district court then awarded EZN
attorneys’ fees of $584,735.08 and costs of $32,892.61. The
district court found those sums reasonable after “[t]aking the
Johnson factors into account.” (J.A. 588.) The award also
reflected an approximately $38,000 voluntary reduction by EZN
for fees related to (1) pre-litigation activity, (2) its
unsuccessful fraud claim, and (3) an unsuccessful motion to
compel. The district court concluded that no further reduction
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was necessary to reflect EZN’s lack of success on its
counterclaims because “there was no duplication involved over
and above the effort to defend itself against the claims in this
case.” (J.A. 589.)
In the initial appeal, we affirmed all of the district
court’s decisions except as to attorneys’ fees and costs. We
concluded that EZN’s fees-and-costs request “might be
unreasonably excessive in the absence of an analysis of the
applicable factors,” which the district court had conducted
“only in the most conclusory manner.” Best Med., 505 F. App’x
at 284. Therefore, we vacated the fee and cost award so that
the district court could fully consider the Johnson factors on
remand.
C.
Following our decision in the first appeal, EZN filed a
supplemental petition in the district court requesting an
additional fees-and-costs award of roughly $309,036.56,
representing amounts incurred after EZN’s original October 2011
fees-and-costs petition. EZN also included an approximately
$38,000 voluntary reduction, largely pertaining to its
unsuccessful cross-appeal.
The district court discussed EZN’s original fee petition
and the supplemental petition in a thorough opinion in April
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2013. See Best Med. Int’l, Inc. v. Eckert & Ziegler Nuclitec
GmbH, No. 1:10-cv-617, 2013 WL 1856095 (E.D. Va. Apr. 29, 2013).
In that opinion, the district court again identified the correct
three-step analysis for determining an appropriate award of fees
and costs. The district court then addressed each of the twelve
Johnson factors that affect the reasonableness of a fee request
and form the basis of the lodestar amount. Specifically, it
found that Johnson factors one (time and labor), four
(opportunity costs), five (customary fee), eight (results
obtained), eleven (length of relationship), and twelve (awards
in similar cases), all justified the award. No Johnson factor
justified an enhancement of or deduction from EZN’s requested
amounts. The district court determined that unsuccessful claims
had been accounted for through voluntary reductions by EZN’s
counsel, and a further percentage reduction was unnecessary
given that all the claims were united by a common set of facts.
The district court then awarded EZN all of its requested fees
and costs after the voluntary reductions were applied.
The district court issued an amended order that provided
that EZN was to receive $871,414.49 in attorneys’ fees and
$55,249.76 in costs. This timely appeal followed, over which we
have jurisdiction under 28 U.S.C. § 1291.
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II.
In an appeal from an award of attorneys’ fees, 1 our standard
of review is exceptionally deferential, as we apply a “sharply
circumscribed” version of our traditional abuse-of-discretion
standard. Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235,
243 (4th Cir. 2009). Under that standard, “the fee award must
not be overturned unless it is clearly wrong.” Id. In
addition, “we will not ordinarily disturb the award even though
we might have exercised th[e] discretion [to award fees] quite
differently.” Johnson v. Hugo’s Skateway, 974 F.2d 1408, 1418
(4th Cir. 1992) (quotation marks omitted). We defer in
recognition of the district court’s “close and intimate
knowledge of the efforts expended and the value of the services
rendered.” In re A.H. Robins Co., 86 F.3d 364, 376-77 (4th Cir.
1996) (quotation marks omitted); EEOC v. Great Steaks, Inc., 667
F.3d 510, 517 (4th Cir. 2012) (“The fixing of attorneys’ fees is
peculiarly within the province of the trial judge, who is on the
scene and able to assess the oftentimes minute considerations
which weigh in the initiation of a legal action.” (quotation
marks omitted)).
“It is for the district court in the first instance to
calculate an appropriate award of attorney’s fees.” Carroll v.
1
Best does not challenge the award of costs to EZN.
9
Wolfpoff & Abramson, 53 F.3d 626, 628 (4th Cir. 1995). The
district court, upon remand, has done so in an opinion
addressing the Johnson factors. Under our standard of review,
Best has a heavy burden to present a case on appeal that
warrants our overturning the district court’s determinations.
Not only would another reversal continue this long-running
dispute, 2 but it would also invite future litigants to transform
their attorneys’ fees disputes into standalone pieces of major
appellate litigation. See id. (“Reviewing fee awards solely for
abuse of a district court’s discretion restricts a litigant’s
propensity to engage in secondary or satellite litigation.”).
Encouraging this sort of never-ending review would conflict with
one of the most often repeated maxims in the attorneys’ fee
context: “[a] request for attorney’s fees should not result in a
second major litigation.” Hensley v. Eckerhart, 461 U.S. 424,
437 (1983); see also Daly v. Hill, 790 F.2d 1071, 1079 n.10 (4th
Cir. 1986) (“[A]ppeals from awards of attorney’s fees, after the
merits of a case have been concluded, . . . must be one of the
least socially productive types of litigation imaginable[,] . .
2
Indeed, Best’s briefs -- asking us to parse most every
line of EZN’s bills on this second trip –- reads as an
invitation to turn this case into a nearly interminable dispute
over fees.
10
. [especially] when litigants challenge a district court’s
factual findings.” (quotation marks omitted)).
Keeping our deferential standard of review in mind, we turn
to the merits of the dispute.
III.
As the district court correctly recognized, “courts
evaluate attorney’s fees under a reasonableness standard.” In
re Abrams & Abrams, P.A., 605 F.3d 238, 243 (4th Cir. 2010);
accord Chawla v. BurgerBusters, Inc., 499 S.E.2d 829, 833 (Va.
1998) (explaining that party seeking fees under contractual
provision must show that fees are reasonable). “The proper
calculation of an attorney’s fee award involves a three-step
process.” McAfee v. Boczar, 738 F.3d 81, 88 (4th Cir. 2013).
“First, the court must determine the lodestar figure by
multiplying the number of reasonable hours expended times a
reasonable rate.” Id. (quotation marks omitted). At this step,
the court should consider the so-called Johnson factors:
(1) The time and labor expended; (2) the novelty and
difficulty of the questions raised; (3) the skill
required to properly perform the legal services
rendered; (4) the attorney’s opportunity costs in
pressing the instant litigation; (5) the customary fee
for like work; (6) the attorney’s expectations at the
outset of the litigation; (7) the time limitations
imposed by the client or circumstances; (8) the amount
in controversy and the results obtained; (9) the
experience, reputation, and ability of the attorney;
(10) the undesirability of the case within the legal
11
community in which the suit arose; (11) the nature and
length of the professional relationship between
attorney and client; and (12) attorneys’ fees awards
in similar cases.
Id. at 88 n.5; see also Robinson, 560 F.3d at 243 (“In deciding
what constitutes a ‘reasonable’ number of hours and rate, we
have instructed that a district court’s discretion should be
guided by the [Johnson] factors.”). Second, the court “must
subtract fees for hours spent on unsuccessful claims unrelated
to successful ones.” McAfee, 738 F.3d at 88 (quotation marks
omitted). Third, and finally, the court “should award some
percentage of the remaining amount, depending on the degree of
success enjoyed by the [party].” Id. at 88 (quotation marks
omitted).
Having carefully reviewed the record and the parties’
arguments, we find no basis to reverse the district court’s
determination that the attorneys’ fee award here was reasonable.
We affirm the award substantially for the reasons given by the
district court in its opinion.
We observe that the district court applied the correct
legal and factual criteria. Best does not raise any objection
to half of the lodestar analysis: the reasonableness of the
rates of EZN’s counsel. Instead, it directs many of its
objections to the reasonableness of EZN’s claimed hours. Yet
the district court carefully applied the Johnson factors to
12
measure the reasonableness of those hours and appropriately
determined that they reflected an exercise of billing judgment.
Furthermore, the district court’s factual conclusions,
chronicled in its comprehensive opinion on remand, find support
in the substantial evidence submitted by EZN in support of its
two fee petitions and the expert testimony attesting to the
reasonableness of the claimed fees. Once the district court
correctly calculated the lodestar figure, there attached a
“strong presumption” that the figure was reasonable. Perdue v.
Kenny A., 559 U.S. 542, 554 (2010).
Many of Best’s contentions on appeal relate to its belief
that the district court did not adequately account for the
relief EZN actually obtained –- or did not obtain -- on its
claims. Whether such arguments are premised on Johnson’s
“results obtained” factor or the third step’s “degree of
success” adjustment, they afford no basis to reverse the
district court. The district court specifically held that “the
amount in controversy was substantial and EZN obtained favorable
results on the merits throughout the litigation in this Court
and at the Fourth Circuit as this Court's findings and
conclusions of law and liability were affirmed.” Best Med.,
2013 WL 1856095, at *4. The district court’s view of the
disposition of the case is accurate given that this dispute
centered upon Best’s claims, not those brought as compulsory
13
counterclaims by EZN. EZN was entirely successful in defending
Best’s claims. Despite this broad success, the district court
nevertheless applied more than $50,000 in reductions for certain
less-than-fully-successful claims and appeals. Id. at *5-6.
Though the district court refused to make further deductions, it
did so because most of the claims were “united by a common core
of facts.” Id. at *6, *7. In light of that finding, the
district court might have in fact committed reversible error by
reducing the fees further. See Bodziak v. Runyon, 145 F.3d 194,
197 (4th Cir. 1998) (reversing lower court judgment that reduced
fees and costs by 40 percent, where lower court had not made a
finding that the successful and unsuccessful claims were not
founded upon a “common core of facts”). We also cannot fault
the district court’s “common core” finding, as many of the facts
underlying EZN’s counterclaims also supported its defenses
against Best’s initial claims. See, e.g., Parr v. Alderwoods
Grp., Inc., 604 S.E.2d 431, 435 (Va. 2004) (“[T]he first party
to materially breach the contract cannot enforce the provisions
of the . . . contract.”).
Though we do not endeavor to address each of Best’s many
other attacks on the district court’s judgment, we note that
many of them –- if not all of them -- address matters that fall
within the heartland of the district court’s discretion.
Compare, e.g., (Opening Br. 8-18 (arguing that the district
14
court awarded fees for hours that were excessive, unnecessary,
or duplicative)), with Daly v. Hill, 790 F.2d 1071, 1080 (4th
Cir. 1986) (noting that “[t]he district court was in the best
position to determine whether the efforts of the . . . attorneys
were duplicative [or] . . . reasonably necessary under the
particular circumstances”). Given that reality, we are not at
all left with “a definite and firm conviction that the court
below committed a clear error of judgment in the conclusion it
reached upon a weighing of the relevant factors.” Belk, Inc. v.
Meyer Corp., U.S., 679 F.3d 146, 161 (4th Cir. 2012) (quotation
marks omitted).
IV.
For these reasons, then, the district court’s judgment on
attorneys’ fees and costs is
AFFIRMED.
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