In re Outsidewall Tire Litigation

52 F. Supp. 3d 777, 2014 U.S. Dist. LEXIS 139836, 2014 WL 4925782
CourtDistrict Court, E.D. Virginia
DecidedSeptember 29, 2014
DocketCivil Action No. 1:09cv1217
StatusPublished
Cited by11 cases

This text of 52 F. Supp. 3d 777 (In re Outsidewall Tire Litigation) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Outsidewall Tire Litigation, 52 F. Supp. 3d 777, 2014 U.S. Dist. LEXIS 139836, 2014 WL 4925782 (E.D. Va. 2014).

Opinion

MEMORANDUM OPINION

T.S. ELLIS, III, District Judge.

At issue post-judgment in this copyright infringement and conversion case is a dispute between (1) plaintiffs, who won a final and now-affirmed $26 million judgment against various foreign corporations and (2) Gilbert LLP, plaintiffs’ former counsel, over the value of the latter’s lien for fees and expenses, filed pursuant to Va.Code § 54.1-3932. This is, in essence, a fee dispute between a law firm and the firm’s former clients. It arises because post-judgment, but prior to completion of the appeal, the two former Gilbert LLP attorneys who led the effort to win the judgment—August Matteis and William Copley—left Gilbert LLP to form their own law firm, Weisbrod, Matteis & Copley PLLC (“WMC”). When this occurred, plaintiff, Jordan Fishman, elected to discharge the Gilbert law firm as plaintiffs’ counsel and to retain instead WMC as plaintiffs’ counsel. Thereafter, the Gilbert law firm, based on its fee contract with plaintiffs and the work it had performed on the case, filed a lien in this district for fees and expenses under Va.Code § 54.1-3932, claiming more than $4.5 million in fees plus a share of the moneys received from the currently underway judgment collection efforts, and more than $1.8 million in expenses. Plaintiffs do not contest the validity of the. lien, but reject the amounts claimed as excessive, unreasonable, and contrary to settled and controlling Virginia law, which allows the discharged Gilbert law firm a reasonable fee based not on the fee contract between plaintiffs and the Gilbert law firm, but solely on the, basis of quantum meruit.

This memorandum opinion resolves this dispute and concludes, for the reasons that follow, that the appropriate, fair, and reasonable value of the Gilbert law firm’s lien is $1,958,341.67.

I.

Plaintiffs in the underlying case are (i) Jordan Fishman, a Florida citizen, and three companies he owns and controls, namely (ii) Tire Engineering and Distribution, LLC, a Florida company, (iii) Bearcat Tire ARL LLC, also a Florida company, and (iv) Bcatco A.R.L., Inc., which is incorporated under the laws of the Jersey Channel Islands. During times relevant to [781]*781this litigation, plaintiffs were in the business of designing, manufacturing and selling highly specialized tires for use on underground mining vehicles.

There were two sets of defendants in the underlying litigation. The first set, collectively referred to as the “Al Dobowi defendants,” consisted of (i) Al Dobowi Tyre Co. LLC, (ii) Al Dobowi Ltd., (in) TyreX International, Ltd., and (iv) TyreX International Rubber Co., Ltd., all of which were headquartered in the United Arab Emirates and owned by Surender Kandhari, a Dubai citizen. The second set of defendants, collectively referred to as the “Linglong defendants,” were (i) Shandong Linglong Rubber Co., Ltd. and (ii) Shandong Ling-long Tire Co., Ltd., both of which were incorporated and based in China. At all relevant times, the Al Dobowi and Ling-long defendants were engaged in the business of designing, manufacturing, and selling rubber tires, including underground mining tires.

By 2009, Jordan Fishman had become convinced that his head of sales had conspired with plaintiffs’ competitors, the Al Dobowi and Linglong defendants, to steal plaintiffs’ copyrighted underground mining tire blueprints and designs and then to sell knock-off copies of plaintiffs’ tires around the world, thereby damaging plaintiffs. Accordingly, Fishman sought counsel to vindicate plaintiffs’ rights. In the end, he chose the Gilbert law firm and on August 4, 2009, he signed a contingent fee letter agreement with the Gilbert law firm. This letter agreement, drafted by the Gilbert law firm, provides in essence that plaintiffs would pay the Gilbert law firm a contingency fee equal to 40 % of the gross amount of any sum recovered in attorney’s fees. The agreement also notes that plaintiffs would reimburse the Gilbert law firm for “all costs and expenses related to this matter from the gross amount received by it.” The letter concludes with a termination provision that provided that in the event Fishman terminated the firm’s representation, the Gilbert law firm “will be entitled to a fee based upon the hours expended by the Firm on this representation at the hourly rates normally charged by the involved personnel for the type of work rendered.” Id.1

From the date of plaintiffs’ retention of the Gilbert law firm until plaintiffs’ discharge of the firm in or around October 2011, plaintiffs’ case was handled chiefly by Matteis, as lead counsel, and Copley. Other Gilbert law firm lawyers assisted Matteis and Copley in litigating the case, but played less substantial roles in the case.

On October 28, 2009, plaintiffs, by counsel, filed two complaints in this district, one against the Al Dobowi defendants and one against the Linglong defendants. The two suits were promptly consolidated after which the parties briefed and argued various Rule 12 threshold motions and then proceeded to conduct discovery. The discovery period was marked by a number of disputes, which the record reflects were fully briefed and argued. After completion of discovery, defendants sought summary judgment on all nine counts and succeeded on four counts. Plaintiffs then proceeded to trial on the remaining counts: (1) violation of the Copyright Act, 17 U.S.C. § 101 et seq., (2) violation of the Lanham Act, 15 U.S.C. § 1051 et seq., as to registered marks, (3) violation of the Lanham Act as to unregistered marks, (4) [782]*782common law conversion, and (5) common law civil conspiracy.

During the six-day trial, the parties presented live and videotaped testimony from a number of witnesses, substantial documentary evidence, and competing expert testimony on the issues of infringement and damages. In the end, the jury returned a verdict in favor of plaintiffs, awarding plaintiffs $26 million in damages jointly and severally against all defendants. Defendants’ post-verdict Rule 50 motion met with only limited success; the registered trademark claim was dismissed for lack of evidence and the claim based on all but two of the unregistered marks suffered the same fate. Defendants’ new trial motion failed as the record plainly supported the remaining verdicts and dismissal .of some claims did not undermine the jury’s damages award, as the measure of damages was' the same for all counts. Also post-trial, plaintiffs sought and obtained a $632,377.50 attorney’s fee award against the A1 Dobowi defendants on the ground that the A1 Dobowi defendants’ malicious, willful, and deliberate infringing conduct made this an “exceptional” case warranting a fee award pursuant to 15 U.S.C. § 1117(a). See In re: Outsidewall Tire Litigation, 748 F.Supp.2d 557 (E.D.Va.2010).

Defendants appealed and on June 6, 2012, the Court of Appeals for the Fourth Circuit reversed the remaining trademark and conspiracy verdicts, but nonetheless upheld the $26 million judgment against defendants based on the jury’s verdicts on the conversion and copyright violation claims. See Tire Eng’g and Distrib., LLC v. Shandong Linglong Rubber Company, Ltd.,

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52 F. Supp. 3d 777, 2014 U.S. Dist. LEXIS 139836, 2014 WL 4925782, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-outsidewall-tire-litigation-vaed-2014.