Kci United States, Inc. v. Healthcare Essentials, Inc.

339 F. Supp. 3d 672
CourtDistrict Court, N.D. Ohio
DecidedSeptember 19, 2018
DocketCASE NO. 1:14CV549
StatusPublished

This text of 339 F. Supp. 3d 672 (Kci United States, Inc. v. Healthcare Essentials, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kci United States, Inc. v. Healthcare Essentials, Inc., 339 F. Supp. 3d 672 (N.D. Ohio 2018).

Opinion

PEARSON, District Judge

Pending before the Court are KCI's motion for attorney fees and costs (ECF No. 367) and individual Cavitch Attorneys Komlavi Atsou, Michael R. Rasor, and Eric J. Weiss's motion to reconsider and revise the July 16, 2018, Order imposing sanctions [ECF No. 363], ECF No. 383. The Court has been advised, having reviewed the record, the parties' briefs, and the applicable law. For the reasons stated below, the Court denies the motion for reconsideration and assesses attorney fees and costs against all Defendants, the Cavitch law firm, and three individual Cavitch Attorneys.

On August 24, 2018, the Court held an evidentiary hearing on attorney fees and costs. See August 24, 2018, Minutes of Proceedings . Parties filed briefs in support of their positions before (ECF Nos. 367, 372, 377, 402, 421) and after (ECF Nos. 425, 426, 428, 430, 432) the hearing. All Interested Parties and all but three Defendants1 were represented at the hearing, and all represented parties made their positions known to the Court. For the reasons that follow, the Court awards attorney fees and costs to Plaintiff KCI in the following amounts:

As against all Defendants: $2,464,313.55 (accounting for $2,349,346.50 in reasonable attorney fees and $114,967.05 in costs);

As against the Cavitch Law Firm: $365,200.67 (accounting for $354,419.00 in reasonable attorney fees and $10,781.67 in costs);

As against Attorney Atsou: $365,200.67 (accounting for $354,419.00 in reasonable attorney fees and $10,781.67 in costs); and

As against Attorney Rasor: $365,200.67 (accounting for $354,419.00 in reasonable attorney fees and $10,781.67 in costs);

As against Attorney Weiss: $290,488.30 (accounting for $282,600.25 in reasonable attorney fees and $7,888.05 in costs);

*677All amounts are joint and several among Defendants, the Cavitch firm, and the Cavitch Attorneys. KCI is entitled to recover no more than $2,464,313.55, plus post-judgment interest, collectively from Defendants and Interested Parties in satisfaction of this ruling.

I. Background

On June 29, 2018, the Court entered default judgment against Ryan Tennebar, Colin Tennebar, Healthcare Essentials, LLC, Healthcare Essentials, Inc., Healthcare Essentials Medical Devices, LLC, RT Acquisition, Inc., Abel Cortez, Daniel Rader, and Anthony Estrada ("Defendants"). ECF No. 360. Shortly thereafter, the Court granted KCI's motion for sanctions against law firm Cavitch Familo & Durkin Co., LPA ("Cavitch"), and three individual Cavitch Attorneys Komlavi Atsou, Michael R. Rasor, and Eric J. Weiss ("Cavitch Attorneys"). ECF No. 363. In several orders issued in the lead-up to the evidentiary hearing, the Court made clear that, during that hearing, it would not entertain arguments concerning the underlying facts of the misconduct or whether such conduct merited sanctions in the first place. See ECF Nos. 392, 410, 411. Instead, evidence and arguments were limited narrowly to "amounts to be paid" in reasonable attorney fees and costs. See ECF No. 363 at PageID#: 6674 n.2. Although it was not discussed at the evidentiary hearing, the Cavitch Attorneys' motion for reconsideration has been fully briefed. ECF Nos. 383; 401; 418. Accordingly, this Order addresses both the motion for reconsideration (ECF No. 383) and the amounts in attorney fees and costs owed by Defendants and Interested Parties to KCI as a result of the default judgment (ECF No. 360) and Order imposing sanctions (ECF No. 363).

Without revisiting every instance of Cavitch and its attorneys' misconduct, it is instructive to summarize. In the Order imposing sanctions, the Court ruled that Cavitch and its attorneys engaged in discovery abuses under Rules 26(g) and 37(b) of the Federal Rules of Civil Procedure by their:

(1) misrepresentations made to the Court and KCI during in-person hearings regarding Defendants' prior document discovery productions;
(2) direct assistance in the creation of fabricated and inaccurate "evidence" produced to KCI in response to Orders from the Court requiring production;
(3) actual knowledge of additional false and misleading documents produced in discovery prior to its withdrawal as counsel;
(4) withdrawing [as] counsel in this case without disclosing any of [their] improprieties and without correcting prior, false document productions and false statements to the Court and KCI.

ECF No. 363 at PageID#: 6678-79. The Cavitch Attorneys were also sanctioned under 28 U.S.C. § 1927 because their false assertions, fabricated evidence, and failure to correct the record unreasonably multiplied proceedings.2 ECF No. 363 at PageID#: 6692. Finally, the Court suggested that Cavitch and its attorneys' conduct could be sanctioned under the Court's inherent authority.3 Id. at PageID#: 6683.

*678Specific instances of misconduct are discussed as relevant throughout this Order.

KCI argues that Defendants are mandatorily liable for reasonable attorney fees and costs under RICO and OCA (Ohio's state-law RICO counterpart) as a result of the default judgment on those counts (ECF No. 360). See 18 U.S.C. § 1964(c) ; Ohio Rev. Code § 2923.34(F). This liability, KCI argues, is mandatory, and it is separate from any attorney-fee obligation Defendants may have incurred by engaging in litigation misconduct. ECF No. 421 at PageID#: 7639.

KCI asks the Court to award an aggregate figure of $2,464,313.55 (comprised of $2,349,346.50 in attorney fees and $114,967.05 in costs). Id. at PageID#: 7639-40. It asks for that award to be entirely assessed against all Defendants, and for portions of that total award to be assessed against Cavitch and its attorneys jointly and severally with Defendants and with each other. Id. at PageID#: 7640-42. Specifically, it asks the Court to impose $2,152,356.42 (that is, $2,039,180.46 in attorney fees and $113,175.96 in costs) against Cavitch, Attorney Atsou, and Attorney Rasor, and to impose $1,554,637.68 (that is, $1,470,639.69 in attorney fees and $83,997.99) against Attorney Weiss. Id.

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Bluebook (online)
339 F. Supp. 3d 672, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kci-united-states-inc-v-healthcare-essentials-inc-ohnd-2018.