Donald Bowers v. ClearOne Communications, Inc. ( 2013 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 12-16557
Non-Argument Calendar
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D.C. Docket No. 1:09-cv-00100-JRH-WLB
DIAL HD, INC.,
a Georgia corporation,
Plaintiff,
DONALD BOWERS,
individually and as CEO of Dial HD, Inc.,
Plaintiff-Appellant,
versus
CLEARONE COMMUNICATIONS, INC.,
Defendant-Appellee.
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Appeal from the United States District Court
for the Southern District of Georgia
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(September 18, 2013)
Before CARNES, Chief Judge, BARKETT and MARCUS, Circuit Judges.
PER CURIAM:
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On July 30, 2009, Donald Bowers and his company, Dial HD, Inc. (“Dial
HD”) (collectively, “Bowers”), filed a complaint in Georgia state court alleging
that ClearOne Communications, Inc. (“ClearOne”) engaged in tortious interference
with his business relations, abusive litigation, and other state law claims. Bowers
filed this action one day before he was set to appear at an evidentiary hearing on a
motion seeking to hold Bowers in contempt for violation of an injunction, brought
by ClearOne in a related case in Utah (“Utah Case”). In the Utah Case, ClearOne
had prevailed in a trade secret infringement suit against Bowers’s son, Lonny
Bowers, and several others (“Utah Defendants”), and the Utah district court had
issued a permanent injunction barring the Utah Defendants from disclosing, using,
or transferring the trade secret at issue in that case. ClearOne later learned that the
Utah Defendants and Bowers had established Dial HD and had begun to sell
products containing the trade secret, and moved to hold Bowers in contempt.
ClearOne removed Bowers’s state action to the U.S. District Court for the
Southern District of Georgia, and moved for dismissal on the basis that Bowers
had brought this action in retaliation for the Utah Case. Thereafter, the district
court dismissed all but one of Bowers’s claims, and said: “If it becomes clear to the
[district court] that . . . this case has been brought in bad faith, the [c]ourt will not
hesitate to . . . impos[e] sanctions.” After summary judgment was entered against
Bowers, and after several rounds of additional briefing, the district court
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determined that it would impose sanctions on Bowers under its inherent power. At
this point, Bowers’s lawyer withdrew, and Bowers proceeded pro se in opposing
ClearOne’s fee petition. The district court awarded ClearOne $59,679.48 in
attorneys’ fees and costs.
Bowers, proceeding pro se on appeal, argues that: (1) he did not receive
adequate notice of the district court’s intent to use its inherent power; (2) the
district court abused its discretion by imposing excessively high sanctions; (3) the
district court abused its discretion by permitting Bowers’s attorney to withdraw;
(4) the district court abused its discretion by failing to sua sponte recuse himself;
and (5) the district court’s order granting sanctions should be vacated pursuant to
O.C.G.A. § 17-1-4. After thorough review, we affirm.
I.
We review a district court’s award of sanctions under Rule 11 or its inherent
power for abuse of discretion. Amlong & Amlong, P.A. v. Denny’s, Inc., 500 F.3d
1230, 1237 (11th Cir. 2007). We review for clear error the district court’s factual
finding of bad faith. Mar. Mgmt., Inc. v. United States, 242 F.3d 1326, 1331 (11th
Cir. 2001) (addressing an award under the Equal Access to Justice Act, 28 U.S.C. §
2412). We review for abuse of discretion the district court’s imposition of
sanctions in a certain amount, as well as the district court’s order awarding
attorneys’ fees. Martin v. Automobili Lamborghini Exclusive, Inc., 307 F.3d
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1332, 1336 (11th Cir. 2002); Am. Civil Liberties Union of Ga. v. Barnes, 168 F.3d
423, 427 (11th Cir. 1999). District courts have broad discretion to manage their
cases. See Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1366-67 (11th Cir.
1997). Thus, we review for abuse of discretion the district court’s decision with
respect to an attorney’s motion to withdraw. See In re Kellogg, 197 F.3d 1116,
1119 (11th Cir. 1999) (bankruptcy appeal); Mekdeci v. Merrell Nat. Lab., 711 F.2d
1510, 1521 (11th Cir. 1983). We also review for abuse of discretion a district
court’s denial of a motion for an extension of time. See Young v. City of Palm
Bay, Fla., 358 F.3d 859, 860-61, 863-65 (11th Cir. 2004). We generally review a
district court’s refusal to recuse for abuse of discretion. United States v. Bailey,
175 F.3d 966, 968 (11th Cir. 1999). However, for issues of recusal raised for the
first time on appeal, we review for plain error. Curves, LLC v. Spalding Cnty.,
Ga., 685 F.3d 1284, 1287 n.2 (11th Cir. 2012).
II.
First, we find unavailing Bowers’s argument that he did not receive adequate
notice of the district court’s intent to use its inherent power to impose sanctions. A
district court may impose sanctions using its inherent power “if in the informed
discretion of the court . . . the Rules are [not] up to the task.” Peer v. Lewis, 606
F.3d 1306, 1315 (11th Cir. 2010) (quotation omitted). Before imposing sanctions
under a district court’s inherent powers, the district court must make a finding of
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bad faith. In re Mroz, 65 F.3d 1567, 1575 (11th Cir. 1995). The court must make
specific findings as to the party’s conduct that warrants sanctions. In re Porto, 645
F.3d 1294, 1304 (11th Cir. 2011) (addressing a bankruptcy court’s imposition of
sanctions). Bad faith is an objective standard that is met if the party’s conduct was
objectively reckless, or outside of the bounds of acceptable conduct. Amlong &
Amlong, 500 F.3d at 1241 (addressing sanctions pursuant to 28 U.S.C. § 1927).
When a court imposes sanctions under its inherent power, “[d]ue process
requires that the attorney (or party) be given fair notice that his conduct may
warrant sanctions and the reasons why. Notice can come from the party seeking
sanctions, from the court, or from both.” Mroz, 65 F.3d at 1575 (citation omitted).
In the context of Rule 11 sanctions, we’ve said that “due process will demand more
specific notice” for a client than for an attorney. Donaldson v. Clark, 819 F.2d
1551, 1560 (11th Cir. 1987). The sanctioned party must have an opportunity to
respond, orally or in writing, but the district court need not hold a separate hearing
before imposing sanctions. Id. “[T]he timing and content of the notice . . . will
depend upon an evaluation of all the circumstances and an appropriate
accommodation of the competing interests involved.” Id. at 1558.
Bowers says that he received insufficient notice of the district court’s intent
to impose sanctions under its inherent power. But the record shows that the district
court warned him in an early order that it would impose sanctions if it found that
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he had sued in bad faith, and ClearOne argued in its reply to Bowers’s opposition
to the summary judgment motion and in its reply to his opposition to the Rule 11
sanctions motion that the district court should impose sanctions under its inherent
power. Bowers specifically responded that sanctions under the court’s inherent
power were inappropriate because he did not file his complaint in bad faith. On
this record, the district court gave adequate notice of its intent to impose sanctions
under its inherent power. Bowers’s claim that only his attorney received notice of
sanctions also fails. Indeed, after his lawyer withdrew, Bowers filed a pro se
opposition to ClearOne’s accounting of fees, arguing that the district court had
improperly applied sanctions under its inherent power -- which indicates that
Bowers himself had been notified.
Nor can we conclude that the district court clearly erred in finding as fact
that Bowers’s actions were tantamount to bad faith. See Mar. Mgmt., Inc., 242
F.3d at 1331. Bowers’s claim that the district court considered Bowers’s actions in
the Utah Case is meritless because the district court’s finding of bad faith was
expressly based only upon Bowers’s conduct in this case. Further, the district
court discussed the Utah Case in relation to its finding that Bowers’s purpose in
filing this action was to retaliate against ClearOne and to pursue a strategic
advantage in that action. Similarly, it mentioned the proceedings in other
jurisdictions to demonstrate Bowers’s “overarching plan” to harass ClearOne.
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Finally, as for Bowers’s claim that the district court erred by failing to hold a
hearing after he presented his and his attorney’s affidavits attesting that Bowers did
not act in bad faith, we’ve held that a district court need not hold a hearing before
imposing Rule 11 sanctions. Moreover, the record shows that the district court
considered Bowers’s argument that he had presented evidence controverting
ClearOne’s claims of bad faith. It did not clearly err in determining that Bowers’s
evidence was insufficient to reconsider its decision to impose sanctions, nor in
determining that Bowers acted in bad faith by disregarding its order directing him
not to use this proceeding to gain materials for the Utah Case. Thus, we affirm the
district court’s order imposing sanctions on Bowers under its inherent power.
III.
We likewise disagree with Bowers’s claim that the district court abused its
discretion by imposing excessively high sanctions. In calculating a reasonable
award of attorneys’ fees, a district court must first calculate the “lodestar” amount -
- the number of hours reasonably expended multiplied by a reasonable hourly rate.
Barnes, 168 F.3d at 427. A reasonable hourly rate is the “prevailing market rate in
the relevant legal community for similar services by lawyers of reasonably
comparable skills, experience, and reputation.” Loranger v. Stierheim, 10 F.3d
776, 781 (11th Cir. 1994) (quotation omitted) (awarding attorneys’ fees pursuant to
42 U.S.C. § 1988). The district court is “itself an expert” on the reasonableness of
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hourly rates and “may consider its own knowledge and experience” on the topic.
Id. (quotation omitted). Further, the fee applicant must provide the district court
with detailed evidence about the reasonable hourly rate, as well as records to show
the time spent on the different claims and the general subject matter of the time
expenditures set out with particularity. Barnes, 168 F.3d at 427. In addition, a
“well-prepared fee petition also would include a summary, grouping the time
entries by the nature of the activity or stage of the case.” Id. (quotation omitted).
We noted in Barnes that imprecise billing records, lumping together all tasks
performed on a given day without specifying the amount of time spent on each
task, make it difficult for the district court to calculate the number of hours an
attorney devoted to a particular task. Id. at 429. Where an hour-by-hour review of
fee documentation is “impractical,” we have approved an across-the-board
percentage cut to either the total number of hours claimed or to the lodestar
amount. Loranger, 10 F.3d at 783. With respect to redactions, we have held that a
district court did not abuse its discretion where “most” of the entries were not
severely redacted, and the district court could use the surrounding time entries to
conclude that the “time claimed . . . was spent on [the] matter.” Oxford Asset
Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1197 (11th Cir. 2002). However, “where a
significant number of entries are severely redacted or it appears that fee counsel
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has failed to use billing judgment, it may be an abuse of discretion to award fees
based on the redacted entries.” Id.Here, the district court did not abuse its discretion in awarding ClearOne
$59,679.48. It specifically addressed each of Bowers’s objections to ClearOne’s
accounting of costs, gave “principled reasons for those decisions, and show[ed] its
calculation.” See Barnes, 168 F.3d at 427 (quotation omitted). The district court
reasonably reduced all of the hourly fees in excess of $250 to that rate based on its
determination that $250 per hour was a reasonable rate in the Southern District of
Georgia. It also reasonably applied a 25% across-the-board reduction to the fees
charged by one law firm based on its conclusion that the firm used block billing,
making it difficult to ascertain how much time was spent on each task. As for the
redacted billing records, the district court correctly noted that one law firm’s
invoices had few redactions, and that while the other had more redactions, they
were minor and the surrounding entries sufficiently showed that the time claimed
was spent litigating this case. In any event, the 25% across-the-board reduction
would correct any deficiencies that the redactions might have caused. Bowers has
not shown that the district court abused its discretion concerning these issues.
The district court also determined that the case was not overstaffed because
Bowers’s initial and amended complaints raised multiple issues, and although six
attorneys from two law firms worked on the case, two associates did the bulk of
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the work. The time entries showed distinct contributions from each attorney, and
that each attorney spent a reasonable amount of time on their tasks. Even if there
were “minor deficiencies,” the across-the-board cut rectified them. Finally, the
district court correctly noted that, contrary to Bowers’s contention, ClearOne
provided a summary chart of its charges, but that even if it had not done so, a
summary chart was not a prerequisite for the award of attorneys’ fees. See Barnes,
168 F.3d at 427. Thus, as with the attorneys’ fees, Bowers has not shown that the
district court’s determinations were unreasonable or an abuse of its discretion.
In short, the district court did not make a clear error of judgment or apply the
wrong legal standard in arriving at the sanctions award. Furthermore, its order
“allow[ed] meaningful review,” including a detailed explanation of each charge
and how it calculated the final amount. See id. We therefore affirm the district
court’s order imposing $59,679.48 in attorneys’ fees and expenses to ClearOne. 1
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Nor are we convinced by Bowers’s remaining arguments. First, we are unpersuaded by
his claim that the district court abused its discretion by permitting Bowers’s attorney to withdraw
at the time he did, because, among other things, district courts have broad discretion to manage
their cases, and Bowers has not shown that the district court mismanaged the case or that the
grant of the attorney’s motion to withdraw prejudiced him. See Chudasama, 123 F.3d at 1366-
67. As for his claim that the district court abused its discretion by giving him 7 days to either
obtain new counsel or file a response, rather than the 14 days that he requested, again, Bowers
has not shown that the partial grant of his motion for an extension of time prejudiced him. As for
Bowers’s argument that the district judge abused his discretion by failing to sua sponte recuse
himself, Bowers’s allegations of bias arise from judicial rulings, which almost never constitute a
valid basis for a bias or partiality motion. Moreover, the district court did not rely on
extrajudicial knowledge, but on evidence introduced into the record by the parties, and in any
event, a review of the record reveals no “deep-seated favoritism or antagonism,” or any bias on
the part of the district judge. Finally, we find no merit to Bowers’s claim that the district court’s
order granting sanctions relied on a witness’s perjured testimony and should be vacated under
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AFFIRMED.
O.C.G.A. § 17-1-4. As an initial matter, we will not consider the issue, because Bowers never
argued before the district court that Fruit committed perjury, nor did he move for reconsideration
of the sanctions orders based on Fruit’s alleged perjury. See Access Now, Inc. v. Sw. Airlines
Co., 385 F.3d 1324, 1331-32 (11th Cir.2004). But even if we were to consider this claim,
O.C.G.A. § 17-1-4 is a state statute that does not apply in federal court.
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