Rates Technology Inc. v. Broadvox Holding Co.
Rates Technology Inc. v. Broadvox Holding Co.
Opinion of the Court
OPINION AND ORDER
I. INTRODUCTION
On June 9, 2014, I dismissed the patent infringement suit brought by Rates Technology Inc. (“RTI”) against Broadvox Holding Company, LLC and Cypress Communications Operating Company, LLC (collectively “Broadvox”).
Springut, in a separate motion, moves under section 1927 of Title 28 of the United States Code, as well as under the Court’s inherent authority, for sanctions, in the form of attorneys’ fees, against Bro-advox and its counsel.
II. BACKGROUND
A. RTFs Patents
In January 2013, RTI initiated this litigation by bringing a patent infringement suit against Broadvox.
RTFs current businesses include the “support[ ] [of] several of its old customers with rate chip updates for their private pay telephones,” “some consulting work,” “work on some new inventions,” and the “enforce[ment] of its patents.”
RTFs consulting work includes “advi[sing] [people] with respect to various telecommunication issues.”
RTFs work on new inventions has not generated any revenue from 2009 through 2013.
In relation to its patent enforcement, RTI derives a relatively large amount of its revenue from companies that pay RTI for covenant not to sue agreements (“CNS agreements”).
RTI also “continue^] to try to move forward [with] products that [it] designed, developed and manufactured in conjunction with other companies.”
C. RTI Contacts Broadvox
In December 2012, Weinberger, without the assistance of counsel,
Furthermore, in a telephone conversation between Weinberger and Broadvox’s counsel, Alex Gertsburg, Weinberger conveyed to Broadvox that RTI had tested Broadvox’s network and systems “[b]y making contact with [Broadvox’s] customers.”
Weinberger also represented during his telephone call with Gertsburg that two law firms had each provided to RTI a formal written opinion detailing Broadvox’s alleged infringement of RTFs patents.
Weinberger further represented in his telephone call with Gertsburg that RTI had “done testing by two independent testing groups[.]”
D. Broadvox’s Rule 11 Motion
After RTI filed the complaint in this case, Broadvox moved for sanctions under Federal Rule of Civil Procedure 11, arguing that RTI had not conducted a reasonable pre-suit investigation.
E. RTI’s Adjournment of the 30(b)(6) Deposition
In December 2013, RTI had intended to depose Broadvox pursuant to Federal Rule of Civil Procedure 30(b)(6).
F. Markman Hearing
On December 27, 2013, I held a Mark-man hearing in this case.
G. Springut Withdraws as RTI’s Counsel
On February 28, 2014, Springut moved to withdraw as counsel for RTI, citing RTI’s failure to pay for legal services rendered by Springut.
H. Broadvox Moves for Attorneys’ Fees and Nontaxable Costs Against RTI and Springut
After I dismissed the case, on June 23, 2014, Broadvox moved against RTI and Springut for an order declaring this case “exceptional” under section 285 and for an award of attorneys’ fees and nontaxable costs.
On July 21, 2014, Springut filed its opposition arguing, among other things, that Broadvox cannot prevail against Springut because (1) section 285 does not apply to counsel,
On August, 1, 2014, Broadvox withdrew its motion as to Springut, but maintained it as to RTI.
I. Springut Moves for Sanctions Against Broadvox
Springut, in response to Broadvox’s motion under section 285, now moves against Broadvox for sanctions under section 1927 and the Court’s inherent authority, claiming that Broadvox filed its motion against Springut in bad faith.
J. RTI Fails to Oppose Broadvox’s Motion
As RTI has still not obtained legal counsel, it cannot appear before the Court to oppose Broadvox’s motion against it.
III. LEGAL STANDARD
The Second Circuit recently articulated in Jackson v. Federal Express that, in the context of an unopposed motion for summary judgment, “[a] non-response does not risk a default judgment[.]”
District courts in the Southern District of New York have applied a similar standard in contexts other than an unopposed motion for summary judgment.
IV. APPLICABLE LAW
A. Sanctions Under 35 U.S.C. § 285
Section 285 provides, in its entirety, that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” In Octane Fitness, LLC v. ICON Health & Fitness, Inc., the Supreme Court eschewed the former interpretation of section 285, and articulated a new, more flexible standard by which to assess sanctions under section 285.
*526 an “exceptional” case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances.92
Under this standard, “a district court may award fees in the rare case in which a party’s unreasonable conduct — while not necessarily independently sanctionable — is nonetheless so ‘exceptional’ as to justify an award of fees.”
Section 285, in essence, may require “in exceptional cases ... the losing party to reimburse the prevailing party its attorney fees.”
B. Sanctions Under 28 U.S.C. § 1927 and the Court’s Inherent Authority
Apart from section 285, two additional bases for sanctions exist. First, under section 1927, a court may require any attorney “who so multiplies the proceedings in any case unreasonably and vexatiously ... to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.”
To impose either of these sanctions, “a court must find clear evidence that (1) the offending party’s claims were entirely without color, and (2) the claims were brought in bad faith — that is, ‘moti
In practice, sanctions under section 1927 and sanctions pursuant to a court’s inherent authority materially differ only in that “awards under [section] 1927 are made only against attorneys or other persons authorized to practice before the courts while an, award made under the court’s inherent power may be made against an attorney, a party, or both.”
V. DISCUSSION
A. Springut’s Motion for Attorneys’ Fees Against Broadvox
1. Broadvox Did Not File Its Motion for Attorneys’ Fees in Bad Faith
a. Although Broadvox Brought Its Motion Against Springut Under a Faulty Legal Theory, That Does Not Require a Finding of Bad Faith
Broadvox’s motion for attorneys’ fees and nontaxable costs against RTI and Springut relied predominantly on section 285 as a legal basis for sanctions.
Springut argues that because section 285 does not apply to counsel, “bad faith may be inferred [because Broadvox’s motion was] so completely without merit as to require the conclusion that [it must have been filed] for some improper purpose such as delay.”
Springut argues in its motion for sanctions against Broadvox that Broadvox’s failure to discuss the applicability of section 285 to counsel amounted to more than just “mere incompetence.”
Springut bases its “sleight-of-hand” argument on a number of factors: (1) Broad-vox’s Notice of Motion only cited section 285, not section 1927 or the Court’s inherent authority,
Springut argues that these factors evidence Broadvox’s effort to invoke section 1927 and the Court’s inherent authority (both of which apply to counsel), but focus only on section 285, which has a lower threshold of liability than either section 1927 or the Court’s inherent authority, in order to conflate the standards and prevail on the basis of the relatively easier section 285 standard.
Springut’s “sleight-of-hand” argument, however, fails to satisfy the legal standard required to impose sanctions under section
c. One Plausible Scenario— Poor Lawyering
i. Broadvox’s Motion
One plausible scenario is that Broad-vox’s counsel were not as careful as they should have been. It is plausible that Broadvox mistakenly relied upon a faulty legal theory — section 285 — as a basis for sanctions against Springut.
ii. Springut’s Opposition
Springut served its opposition and Rule 11 motion on Broadvox, arguing that section 285 does not apply to counsel,
Springut argues that “Broadvox’s [treatment [o]f [t]he [alternative [b]ases [i]t [i]nvoked [w]as [n]o [m]ere [c]aptioning [e]rror,” but rather Broadvox had been acting in bad faith.
iii. Broadvox’s Reply
Springut argues further that had Broad-vox really intended to invoke section 1927 and the Court’s inherent authority, Broad-vox should have elaborated on those bases in its reply brief.
d. Broadvox’s Withdrawal Favors a Finding of No Bad Faith
When Broadvox realized the deficiencies in its motion for attorneys’ fees, it timely withdrew its motion as to Springut.
e. Broadvox’s Alleged Misrepresentations Do Not Evidence Bad Faith
Springut also claims that Broad-vox’s motion papers contain “false statements, half-truths and misleading statements” about Springut’s conduct over the course of the litigation.
f. Broadvox’s Failure to Oppose Counter-Arguments Does Not Evidence Bad Faith
Lastly, Springut argues that Bro-advox failed to address various counterarguments posited by Springut in opposition to Broadvox’s motion.
2. Springut Could Have Avoided This Situation Entirely
Although Broadvox initially filed a motion against Broadvox under a legal theory that did not apply to counsel, Springut had the opportunity to dispose of the motion in multiple ways that would have avoided the costs of opposing Broadvox’s motion. Springut, however, chose not to. Springut could have contacted Broadvox and explained the legal error in Broadvox’s motion, and Broadvox may have withdrawn the motion with no further action by Sprin-gut. Or Springut could have written to the Court and asked for a conference to discuss whether Broadvox’s motion could proceed against Springut under section 285.
Springut argues, however, that its motion for attorneys’ fees under section 1927 and the Court’s inherent authority does not have the same safe harbor requirement as a Rule 11 motion.
None of Springut’s arguments have merit. While section 1927 and the Court’s inherent authority do not provide a safe harbor provision, if Springut truly desired to avoid the cost of filing an opposition, it could have taken any of the approaches specified above. And if Springut felt concerned that Broadvox’s allegations would remain on the public record, Springut could have gone on record at a conference before the Court. But even Springut’s insistence on setting the record straight lacks force, given that Broadvox would have withdrawn its motion, and along with it its allegations. Springut’s decision to file an opposition rather than pursue an alternative course of action has only resulted in more legal fees for every party, as well as a greater consumption of judicial resources.
B. Broadvox’s Motion for Sanctions Against RTI
1. RTFs Failure to Oppose Broadvox’s Motion for Attorneys’ Fees and Costs Does Not Allow for a Default Judgment Against RTI
Although RTI, by virtue of its lack of representation, has failed to oppose Broad-vox’s motion for attorneys’ fees and costs, Broadvox is not áutomatieally entitled to a default judgment against RTI. Rather, Broadvox must still show that RTFs conduct meets the standard for sanctions under section 285. For the reasons that follow, I find that RTI’s conduct does not meet the section 285 standard.
2. RTI’s Conduct Did Not Cause Broadvox to Incur Additional Attorneys’ Fees and Costs
RTI, whether acting through Weinberger or through Springut, did not commit any wrongdoing that resulted in needless attorneys’ fees or costs to Broad-vox. Sections 285 is intended “not to control the local bar’s litigation practices!,]” but to “compensate] the prevailing party for the costs it incurred ... where it would be grossly unjust, based on the baselessness of the suit ... to bear its own costs.”
Second, Broadvox contends that RTFs suit was frivolous and that RTFs claim construction positions were baseless.
Regarding RTFs claim construction positions, I do not and did not find them baseless. Although I ruled against RTI when construing many of the claim terms,
Third, Broadvox argues that RTI is a non-practicing entity and hyper-litigious.
In Octane Fitness, the Supreme Court counseled district courts to consider the totality of the circumstances when deciding whether to deem a case “exceptional” and award attorneys’ fees to the prevailing party.
VI. CONCLUSION
For the foregoing reasons, Broadvox’s motion for attorneys’ fees and nontaxable costs against RTI is DENIED and Sprin-gut’s motion for sanctions is DENIED. The Clerk of the Court is directed to close these motions [Dkt. Nos. 142, 163, 171].
SO ORDERED.
. See 6/9/14 Order at 2 [Dkt. No. 140].
. See Motion of Defendants Broadvox Holding Company, LLC and Cypress Communications, LLC for Order Under 35 U.S.C. § 285 Declaring This an Exceptional Case and Awarding to Defendants Their Attorneys' Fees and Nontaxable Costs ("Broadvox Notice of Motion”) at 1-2.
. See generally 8/1/14 Notice of Withdrawal of Motion as to Springut Law P.C. (“Springut Withdrawal”) [Dkt. No. 160].
. See 8/7/14 Notice of Motion for Sanctions ("Springut Motion”).
. See First Amended Complaint ¶ 6.
. See id. ¶¶ 11, 19.
. See Markman Hearing Transcript (“Mark-man Tr.”) at 5:2-9.
. See Deposition Transcript of Gerald Wein-berger ("Weinberger Tr.”) at 91:4-11.
. See id. at 92:24-93:15.
. Id. at 27:12-21.
. Id. at 29:23-31:3. RTI’s distribution of rate chips has "rapidly dimmish[ed]” in recent years. Id. at 32:19-33:3.
. See id. at 31:4-15.
. See id.
. See id. at 31:16-32:7. Magistrate Judge Sarah Netburn ruled that RTI need not identify its customers. See id. at 78:15-81:24.
. Id. at 32:8-15.
. Id. at 34:7-35:5. RTI’s compensation for consulting work accounts for a "relatively small” percentage of RTFs total revenue. Id. at 39:3-19.
.See id. at 32:16-18.
. See id. at 35:6-11. Broadvox has not confirmed whether these documents do in fact remain in the storage bin. Weinberger stated that the compensation from consulting work would have appeared on RTI’s tax returns. See id. at 35:15-19. Broadvox has not confirmed this statement.
. See id. at 35:20-38:9.
. See id. at 38:10-39:2.
. See id.
. See id. at 39:16-40:9.
. See id.
. See id. at 237:15-239:6.
. Id. at 42:11-14.
. See id. at 43:4-7.
. See id. at 42:14-19.
. See id. at 44:5-7.
. See id. at 44:10-11.
. See id. at 49:23-50:6.
. See id. at 50:9-20.
. See id. at 50:23-51:6.
. See id. at 113:11-12; 114:7-9; 118:7-18.
. See generally RTI’s Weinberger E-mails ("Weinberger E-mails”), Ex. H to Declaration of George Pazuniak in Support of Defendants' Motion for Sanctions ("Pazuniak Decl.”).
. See generally id. at 3; 12/18/12 Fetter from Broadvox to Weinberger (“12/18/12 Fetter”), Ex. I to Pazuniak Deck; 12/27/12 Fetter from Broadvox to Weinberger (“12/27/12 Fetter”), Ex. J to Pazuniak Decl.
. See Weinberger E-mails at 4.
. Id. at 3.
. Id.
. Id. at 1.
. Id.
. 12/20/12 Transcript of Conversation between Weinberger and Gertsburg (“Gertsburg Tr.”), Ex. A-10 to Declaration of Alex Gerts-burg in Support of Motion of Defendants Bro-advox Holding Company, LLC and Cypress Communications, LLC for Order Under 35 U.S.C. § 285 Declaring This an Exceptional Case and Awarding to Defendants Their Attorneys Fees and Nontaxable Costs ("Gertsburg Decl.”), at 5.
. Id.
. See Weinberger Tr. at 124:13-25.
. Id. at 131:8-12.
. See Gertsburg Tr. at 6.
. Weinberger Tr. at 255:3-9.
. See id. at 255:10-256:11.
. Gertsburg Tr. at 6.
. See Weinberger Tr. at 258:17-259:15.
. Id. at 259:13-14.
. See generally Defendants’ Motion for Sanctions Under Rule 11 of the Federal Rules of Civil Procedure; Defendants’ Memorandum of Law in Support of Motion for Sanctions Under Rule 11 of the Federal Rules of Civil Procedure.
. See Plaintiff's Memorandum of Law in Opposition to Rule 11 Motion at 7-8.
. See Rates Technology Inc. v. Broadvox Holding Co., No. 13 Civ. 0152, 2014 WL 46538, at *5 (S.D.N.Y. Jan. 6, 2014). Rule 11 provides that "[a] motion for sanctions ... must not be filed or be presented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service or within another time the court sets.” Fed. R.Civ.P. 11(c)(2).
. Rates, 2014 WL 46538, at *5.
. See generally E-mails Regarding the Scheduling of the Deposition, Ex. A to Pazuniak Decl.
. Id. at 7-8.
. See Memorandum in Support of Motion of Defendants Broadvox Holding Company, LLC and Cypress Communications, LLC for Order Under 35 U.S.C. § 285 Declaring This an Exceptional Case and Awarding to Defendants Their Attorneys Fees and Nontaxable Costs ("Broadvox Mem.”) at 20-21.
. See Rates Technology Inc. v. Broadvox Holding Co., 15 F.Supp.3d 307, 312-13 (S.D.N.Y. 2014) (“Broadvox II”).
. See id.
. See Memorandum of Law in Support of Motion by Springut Law P.C. to Be Relieved As Counsel, Dkt. No. 128, at 1. Springut has sought to recover its legal fees from RTI by initiating an action against RTI in state court. See Counsel's Memorandum of Law in Support of Motion for Sanctions Against Defendants and Their Counsel ("Springut Sanctions Mem.”) at 1.
. See generally 3/4/14 Memo Endorsement [Dkt. No. 130],
. See generally 4/4/14 Endorsed Letter [Dkt. No. 133].
. See 6/9/14 Order at 2 [Dkt. No. 140],
. See Representing Yourself in Federal Court {Pro Se), http://www.nysd.uscourts.gov/ courtrules^prose.php ("[Corporations and partnerships must be represented by an attorney.”).
. See 6/9/14 Order at 2 [Dkt. No. 140],
. No new counsel has entered an appearance for RTI as of the date of this Opinion and Order. See generally 13 Civ. 0152(SAS).
. See Broadvox Notice of Motion at 1-2.
. See Broadvox Mem. at 7.
. See id. at 7 (“For the same reasons as those supporting the ‘exceptional case’ finding, Broadvox is also entitled to its fees and expenses under 28 U.S.C. § 1927 ...”).
. See id. at 30 ("District courts have broad power under § 285, as well as under their inherent authority, to award taxable costs, nontaxable costs and attorneys' fees in patent infringement cases.”).
. See Broadvox Notice of Motion at 1.
. See Counsel’s Memorandum of Law in Opposition to Motion for Attorney’s Fees and Costs ("Opp. Mem.”) at 1.
. See id. at 5. Local Civil Rule 7.1(a)(1) provides, in relevant part, that “all motions shall include ... [a] notice of motion ... which shall specify the applicable rules or statutes pursuant to which the motion is brought[.]”
. See Opp. Mem. at 5.
. See generally 9/3/14 Email from Milton Springut, counsel for Springut and former counsel for RTI, to the Court (“Springut Email”).
. See Springut Sanctions Mem. at 1.
. See id.; see also supra note 53.
. See generally Springut Withdrawal.
. I assume Springut withdrew the Rule 11 motion as Springut never filed it with the Court.
. See Defendants’ Reply Brief in Support of Its Motion for Declaration of Exceptional Case and Granting Sanctions Against Plaintiff ("Broadvox Reply”) at 1, 3.
. See generally Notice of Motion for Sanctions ("Springut Motion”).
. See generally id.
. See supra note 64.
. See 1/2/14 Scheduling Order at 1 [Dkt. No. 152]. RTI, through Weinberger, has on several occasions attempted to oppose Broad-vox's motion pro se. See generally 7/18/14 Letter from Weinberger; 9/3/14 Letter from Weinberger to the Court (attaching a prior email from Weinberger to the Court).
. See Notice of Motion for Default Judgment at 2 (requesting a total award of $364,950.71).
. 766 F.3d 189, 194 (2d Cir. 2014).
. Id.
. Id.
. Id.
. See, e.g., Trustees for the Mason Tenders Dist. Council Welfare Fund, Pension Fund, Annuity Fund and Training Program Fund v. Odessy Constructioncorp, No. 14 Civ. 1560, 2014 WL 3844619, at *2 (S.D.N.Y. Aug. 1, 2014) (“[U]nopposed confirmation petitions must fail where the undisputed facts fail to show that the moving party is entitled to judgment as a matter of law.”) (citations and quotations omitted); Sulzer Mixpac USA, Inc. v. Shanghai NSJ Hardware Ltd., No. 09 Civ. 9705, 2013 WL 5997707, at *3 (S.D.N.Y. Nov. 13, 2013) (“Although NSJ has not opposed the instant motion for contempt sanctions, the Court has the responsibility to ensure that the damages and fine sought by Sulzer are appropriate.”) (citations omitted); Stengel v. Black, No. 10 Civ. 8661, 2011 WL 4975767 (S.D.N.Y. Oct. 18, 2011) (evaluating Rule 11 motion on the merits despite lack of opposition); Martell v. Astrue, No. 09 Civ. 1701, 2010 WL 4159383, at *2 n. 4 (S.D.N.Y. Oct. 20, 2010) ("This Court recognizes its obligation to review the record before granting an unopposed motion [for judgment on the pleadings.]”); Haas v. Commerce Bank, 497 F.Supp.2d 563, 564 (S.D.N.Y. 2007) ("[F]ailure to oppose a 12(b)(6) motion cannot itself justify dismissal of a complaint.”) (citations and quotations omitted). Cf. Baptiste v. Sommers, 768 F.3d 212, 214-15 (2d Cir. 2014) (holding that the district court must still consider the five-factor test in Lucas v. Miles, 84 F.3d 532, 535 (2d Cir. 1996), before granting dismissal for failure to prosecute under Federal Rule of Civil Procedure 41(b), even where the plaintiff had "a long and unexplained delay”).
.- U.S. -, 134 S.Ct. 1749, 1756, 188 L.Ed.2d 816 (2014) ("Th[e] [former interpre
. Id.
. Id. at 1757.
. Id. at 1758.
. Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., 687 F.3d 1300, 1310 n. 1 (Fed.Cir. 2012), vacated and remanded, -U.S. -, 134 S.Ct. 1744, 188 L.Ed.2d 829 (2014); see also Gametek LLC v. Zynga, Inc., No. CV 13-2546 RS, 2014 WL 4351414, at *3 (N.D.Cal. Sept. 2, 2014) (citing Highmark, 687 F.3d at 1310 n. 1).
. Phonometrics, Inc. v. ITT Sheraton Corp., 64 Fed.Appx. 219, 222 (Fed.Cir. 2003).
. Id. Generally, "[w]hen a fee-shifting statute that authorizes the courts to award attorneys' fees to prevailing parties does not mention an award against the losing party’s attorney [as is the case in section 285], the appropriate inference is that an award against attorneys is not authorized.” Healey v. Chelsea Resources, Ltd., 947 F.2d 611, 624 (2d Cir. 1991).
. 28 U.S.C. § 1927 (2012).
. Ransmeier v. Mariani, 718 F.3d 64, 68 (2d Cir. 2013) (quoting Chambers v. MASCO, Inc., 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991)).
. Eisemann v. Greene, 204 F.3d 393, 396 (2d Cir. 2000) (quoting Schlaifer Nance & Co. v. Estate of Warhol, 194 F.3d 323, 336 (2d Cir. 1999)).
. Sierra Club v. United States Army Corps of Eng’rs, 776 F.2d 383, 390 (2d Cir. 1985) (citing Nemeroff v. Abelson, 620 F.2d 339, 348 (2d Cir. 1980)).
. Nemeroff, 620 F.2d at 348.
. Schlaifer Nance, 194 F.3d at 336 (quoting Shafii v. British Airways, PLC, 83 F.3d 566, 571 (2d Cir. 1996) (quotations omitted)).
. Milltex Indus. Corp. v. Jacquard Lace Co., 55 F.3d 34 (2d Cir. 1995) (quoting Oliven v. Thompson, 803 F.2d 1265, 1272 (2d Cir. 1986) (quotations omitted)).
. Oliven, 803 F.2d at 1273.
. See Broadvox Mem. at 2-3 (making no mention in the table of contents of any legal basis for sanctions other than section 285).
. See Springut Sanctions Mem. at 4.
. Id. at 5.
. See id. at 4.
. Id. at 7.
. See id. at 5.
. See id.
. See id. at 5-6.
. See id. ató.
. See id.
. See id. at 7.
. The Second Circuit has held that '‘[t]he standard for triggering the award of fees under Rule 11 is objective unreasonableness and is not based on the subjective beliefs of the person making the statement.” Star Mark Mgmt., Inc. v. Koon Chun Hing Kee Soy & Sauce Factory, Ltd., 682 F.3d 170, 177 (2d Cir. 2012) (citations and quotations omitted).
. See Springut Sanctions Mem. at 6 (“If Rule 11 was too stringent to support [Bro-advox’s] motion for fees (as conceded by Broadvox), then a fortiori Section 1927 and inherent authority are too stringent. Yet, notwithstanding disclaiming reliance on Rule 11, Broadvox invoked the other two bases!”).
. Springut argues that, in réality, Broadvox merely sought to include Springut in the motion in order to collect against "deep pockets," given that Broadvox had noted that RTI likely had no remaining assets. See id. at 5. However, assuming that Broadvox mistakenly, yet not in bad faith, relied upon section 285 as a basis for sanctions against Springut, Broadvox likewise could not have- — in bad faith — included Springut in the motion because Broadvox legitimately, although incorrectly, believed that the Court could sanction Springut under section 285.
. Springut argues that Broadvox knew that the standards differed from each other, and that Broadvox deliberately conflated the standards in order to "pull the proverbial 'fast one’ ” on the Court. Id. at 7. Springut evidences this argument by pointing to a footnote in which Broadvox admits that Rule 11 has a more stringent standard than section 285, and that therefore Broadvox would not proceed under Rule 11 against Springut (and RTI) — presumably because Broadvox felt that it could not meet the higher Rule 11 standard. See id. at 6. Springut then draws the inference that if Broadvox would not proceed' under Rule 11, then certainly Broadvox would not proceed under section 1927 and the Court's inherent authority, both of which have standards even more stringent than Rule 11. See id. However, if Broadvox truly did not' appreciate the differences between the standards under section 285, section- 1927, and the Court’s inherent authority, then Springut cannot prove that Broadvox’s admission of the stringent standard under Rule 11 has any impact on Broadvox’s understanding of the standards under section 1927 and the Court’s inherent authority.
. Springut argues that Broadvox continues to evidence bad faith by conflating the various standards. See id. at 7-8. However, I cannot conclude that Broadvox acted in bad faith simply because Broadvox’s argument as to the interpretation of the various standards may not prevail on the merits.
. See Opp. Mem. at 3-5.
. See id. at 5. See also supra note 73.
. See Opp. Mem. at 5. Springut cites three district court cases to support this proposition. See Tutor Time Learning Ctrs. v. GKO Group, Inc., No. 13 Civ. 2980, 2013 WL 5637676 (S.D.N.Y. Oct. 15, 2013); Chevron Corp. v. Donziger, No. 11 Civ. 0691, 2013 WL 4045326, at *1 n. 3 (S.D.N.Y. Aug. 9, 2013); Lyn v. Incorporated Village of Hempstead, No. 03-CV-5041, 2007 WL 1876502, at *16 n. 13 (E.D.N.Y. June 28, 2007).
. Counsel's Reply Memorandum of Law in Support of Motion for .Sanctions Against Defendants and Their Counsel (“Springut Reply”) at 2.
. See id. at 5.
. See id.
. See Broadvox Reply at l(“Although RTFs counsel was the active agent for the conduct reflected in the record and was remunerated for those efforts, the proper focus of the action should be the principal/client, RTI, and not its agents.”).
. Springut argues that Broadvox disingenuously believes that the proper focus should be on RTI, as opposed to Springut. See Springut Reply at 4-5. Springut asserts that Broadvox certainly did not think the focus should only be on RTI when Broadvox moved initially for sanctions against both RTI and Springut. See id. Springut claims that Broadvox only "conveniently discover[ed]” the proper focus when faced with a Rule 11 motion. Id. at 5. However, this argument is speculative. Broadvox could plausibly have had a change of heart, or, more practically, decided that its chances of recovering against Springut were poor and deemed it more appropriate to proceed only against RTI.
. See generally Springut Withdrawal. Bro-advox withdrew its motion as to Springut eleven days after Springut served Broadvox with both an opposition and a Rule 11 motion. See id. (dating the Notice of Withdrawal August 1, 2014); see also Opp. Mem, (dating the opposition July 21, 2014); Springut Email ("The Rule 11 papers were served on July 21, 2014”).
. See Springut Reply at 7 ("Defendants’ [argument that withdrawing the motion should grant it immunity from sanctions] would allow an attorney to burden his adversary with the costs of opposing a frivolous motion brought in bad faith, and then escape sanctions merely by withdrawing the motion before ruled upon.”).
. Springut Motion at 7.
. See id. at 8.
. For example, Springut highlights Broad-vox’s statement that the Court, in a prior opinion, rejected "each and every one” of RTFs proposed claim constructions. See id. at 7-8. Springut notes that Broadvox did not in fact prevail on "each and every one,” but rather the Court adopted two of RTFs proposed claim constructions out of fourteen disputed terms. See id. at 7; see also Broadvox II, 15 F.Supp.3d at 312-13. This "misrepresentation,” as Springut labels it, constitutes the most egregious statement by Broadvox. Nonetheless, it falls short of proving bad faith.
. See Springut Motion at 9.
. Springut in fact set the briefing schedule for Broadvox’s motion, as well as contacted the Court several times before filing its opposition. See generally 6/27/14 Letter from Tal S. Benschar, counsel for Springut and former counsel for RTI, to the Court, Dkt. No. 151; see also generally 7/14/14 Letter from Tal S. Benschar to the Court, Dkt. No. 153; 7/18/14 Notice of Change of Address, Tal S. Benschar, Dkt. No. 155; 7/18/14 Notice of Change of Address, Milton Springut, Dkt. No. 156. Thus, in any of those instances, Springut
. See Springut Reply at 7 (citing Star Mark, 682 F.3d at 176). See also supra note 53.
. Springut Reply at 7.
. I do not consider whether RTI’s conduct meets the standards under section 1927 or the Court’s inherent authority because Broadvox failed to include those legal bases in its Notice of Motion as required under Focal Civil Rule 7.1(a)(1). See supra note 73.
. Highmark, 687 F.3d at 1310 n. 1 (emphasis added).
. See Broadvox Mem. at 9-14.
. See supra Part II.C.
. See id.
. See supra note 52.
. See supra note 54.
. See Broadvox Mem. at 16-17, 25-27.
. For example, Broadvox, in its moving papers, argues that one of RTFs patents requires both "a housing and a disconnection from a telephone jack” and that “Broadvox’s systems demonstrably did not have either of these.” Broadvox Mem. at 27. However, Broadvox provides neither a citation to the record nor to documentary evidence. A review of the record confirms that Broadvox has not proffered any such evidence in this case.
. See generally Broadvox II.
. See generally Plaintiff Rates Technology Inc.'s Opening Claim Construction Brief [Dkt. No. 73], I also found merit to RTFs case law application at the Markman hearing. See Markman Tr. at 10:14-15 ("Your discussion of means plus function, the cases seem to support much of what you said. I have no problem with that.”).
. See Broadvox Mem. at 22-23; see also supra Part II.B (detailing RTFs business).
. Broadvox also argues that RTI has a history of bringing suit, draining its opponent's financial resources, and then defaulting on its own legal fees, as has happened in this case. See Broadvox Mem. at 22-23. However, I do not find that RTI intended, from the outset, not to pay its legal fees. Broadvox evidences RTFs history of not paying legal fees by citing to a complaint from over ten years ago. See id. Moreover, Springut, in its complaint against RTI for unpaid legal fees, admits that RTI did in fact pay Springut for a portion of the suit. See Copy of Summons and Complaint, Ex. A to Declaration of Milton Sprin-gut, at 4. Thus, Broadvox offers nothing other than speculation that RTI never intended to pay its legal fees in this case.
. See Broadvox Mem. at 20-21.
. See generally 12/16/13 Letter from Sprin-gut to Gertsburg, Ex. A-8 to Gertsburg Decl.
. See Broadvox Mem. at 21.
. See id.
. See Octane Fitness, 134 S.Ct. at 1756.
. While Weinberger’s pre-suit conduct certainly exceeded the bounds of commonplace ethical behavior, his status as a non-attorney precludes the finding of any professional conduct violation. See, e.g., New York Rules of Professional Conduct, N.Y.C.R.R. § 1200.00 R. 4.1 (truthfulness in statements to others); ABA Ethical Guidelines for Settlement Negotiations R. 4.1.1 (false statements of material fact). Furthermore, with respect to Wein-berger's statements that litigating this case would impose substantial costs on Broadvox, the ABA notes that "[i]t is ... proper to remind the opposing party of the ordinary costs of proceeding to trial and to suggest that it may be in the opposing party's interest to avoid these costs by agreeing to a settlement.” Id. at R. 4.3.2 committee note.
Reference
- Full Case Name
- RATES TECHNOLOGY INC. v. BROADVOX HOLDING COMPANY, LLC, Cypress Communications Operating Company, LLC, and ABC Companies, 1 to 10
- Cited By
- 2 cases
- Status
- Published