Morris v. Scenera Research, LLC
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Opinion
Morris v. Scenera Research, LLC, 2017 NCBC 47.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION COUNTY OF WAKE 09 CVS 19678
ROBERT PAUL MORRIS,
Plaintiff,
v. FINAL JUDGMENT AND ATTORNEYS’ FEE AWARD SCENERA RESEARCH, LLC and RYAN C. FRY,
Defendants.
1. THIS MATTER is now before the Court on Plaintiff’s five motions
seeking an award of attorneys’ fees and expenses (hereafter collectively referred to as
“attorneys’ fees”) incurred at different stages of the litigation, and on Morris’s Motion
to Strike Defendants’ Reply to Morris’s Request for Pre-judgment Fees and Expenses
(“Motion to Strike”). For the reasons discussed below, the Court DENIES Plaintiff’s
Motion to Strike and awards Plaintiff attorneys’ fees in the amount of $843,405.59.
Young Moore and Henderson, P.A., by Walter E. Brock, Jr. and Andrew P. Flynt, for Plaintiff.
Parker Poe Adams & Bernstein LLP, by Catharine B. Arrowood and Scott E. Bayzle, for Defendants.
Gale, Chief Judge.
I. MATTER BEFORE THE COURT AND SUMMARY OF AWARD
A. Background
2. This case was tried before a jury in January 2012. At the conclusion of
the trial, Plaintiff had prevailed on his statutory claims for unpaid wages and retaliatory discharge, and Defendant Scenera Research, LLC (“Scenera”) had
prevailed on the invention and patent ownership claims. This Court entered the
Judgment based on the jury verdict on May 14, 2012 (“2012 Judgment”). The case
has now returned to this Court, after appeals to the North Carolina Court of Appeals
and the North Carolina Supreme Court, for resolution of the sole issue of Plaintiff’s
award of attorneys’ fees.
3. Ultimately, each aspect of the 2012 Judgment was upheld after appeals
to the Court of Appeals and Supreme Court, except the award of attorneys’ fees, which
the Court of Appeals reversed and remanded. Plaintiff successfully defended his
monetary recoveries on his wage and discharge claims, as well as his right to
attorneys’ fees on those claims, but unsuccessfully challenged other portions of the
2012 Judgment. Defendants successfully defended the ruling in their favor that
Plaintiff has no ownership rights in inventions made during the course of his
employment or in patent applications or issued patents related to those inventions,
which the Court refers to as “ownership claims.”
4. In the 2012 Judgment, the Court, in its discretion, awarded Plaintiff
$450,000 of the $819,752.41 requested for fees incurred up to the time of judgment.
Morris v. Scenera Research, LLC, No. 09-CVS-19678, 2012 NCBC LEXIS 29, at *30–
33 (N.C. Super. Ct. May 14, 2012), aff’d in part and rev’d in part, 229 N.C. App. 31,
747 S.E.2d 362 (2013), aff’d in part and rev’d in part, 368 N.C. 857, 788 S.E.2d 154
(2016). While the Court found that all of Plaintiff’s fees had been reasonably incurred
and charged at reasonable rates, it concluded that the request should be reduced to make the award “reasonable in relation to the results obtained.” Hensley v.
Eckerhart, 461 U.S. 424, 440 (1983); see Morris, 2012 NCBC LEXIS 29, at *30–33.
In doing so, the Court determined that fees should be apportioned between Plaintiff’s
successful and unsuccessful claims.
5. In reversing this Court’s award of attorneys’ fees, the Court of Appeals
stated that
[o]n appeal, Morris argues that the business court erred by allocating among legal claims—and thereby reducing his award of attorneys’ fees—because (1) claims that arise from a common nucleus of operative facts should not be allocated; (2) the business court “failed to make any findings of fact or offer any conclusions of law on whether Morris’s claims and Defendants’ counterclaims [arose] from a common nucleus of operative fact[ ]”; and (3) the parties’ claims did, in fact, arise from a common nucleus of operative fact. We agree with Morris’s first two arguments and refrain from addressing the third.
Morris, 229 N.C. App. at 56, 747 S.E.2d at 377–78 (alterations in original) (emphasis
added) (quoting Brief for Plaintiff/Cross-Appellant at 22–23, Morris, 229 N.C. App.
31, 747 S.E.2d 362 (No. COA12-1481)). In short, the Court of Appeals’ holding
essentially mandates that Plaintiff must recover all fees related to any claim arising
from a nucleus of operative facts common to his successful wage and discharge claims.
6. The parties cross-appealed other issues to the North Carolina Supreme
Court, but neither party appealed the Court of Appeals’ holding on the award of
attorneys’ fees.
7. The Court has been directed to make fact findings as to which fees
incurred prior to the 2012 Judgment relate to claims that arise from a nucleus of
operative facts common to Plaintiff’s successful claims. See Morris, 2016 NCBC LEXIS 101, at *27; see also Morris, 229 N.C. App. at 56, 747 S.E.2d at 377–78. In
directing that no fees should be apportioned if they arise from a nucleus of operative
facts common to Plaintiff’s successful claims, the Court of Appeals severely limited
the Court’s discretion.1 Earlier Court of Appeals decisions had held that a trial court
is not required to apportion fees among successful and unsuccessful claims, but had
not prohibited a trial court from apportioning fees between claims in order to award
an amount that would be reasonable in relation to the plaintiff’s overall success.
Unfortunately, the elimination of that discretion has led, and will likely lead in other
cases, to extended litigation over which fees relate to which claims. This case also
presents the unsettled question whether a plaintiff can, in addition to the initial
award of attorneys’ fees, recover fees incurred in defending the initial award.
8. Further background on this litigation is available in the multiple
reported decisions issued as the case wound through the trial and appellate process.
See, e.g., Morris, 368 N.C. 857, 788 S.E.2d 154, aff’g in part and rev’g in part 229 N.C.
App. 31, 747 S.E.2d 362, aff’g in part and rev’g in part 2012 NCBC LEXIS 29; Morris
v. Scenera Research, LLC, No. 09-CVS-19678, 2016 NCBC LEXIS 101 (N.C. Super.
Ct. Dec. 19, 2016); Morris v. Scenera Research, LLC, No. 09-CVS-19678, 2012 NCBC
LEXIS 1 (N.C. Super. Ct. Jan. 4, 2012).
1 This Court considered this holding when entering its judgment in Out of the Box Developers, LLC, v. Doan Law, LLP, and found that it could, under the particular facts of that case, apportion fees. See No. 10-CVS-8327, 2014 NCBC LEXIS 39, at *23–25 (N.C. Super. Ct. Aug. 29, 2014). That judgment was not appealed. B. Plaintiff’s Five Attorneys’ Fees Motions
9. The attorneys’ fees motions now before the Court are (1) Plaintiff’s
Motion for Supplemental Relief, filed on March 7, 2012, and supplemented on April
18, 2012, and May 10, 2012, seeking fees incurred through April 30, 2012, in the
amount of $819,752.41 (“Prejudgment Fees”); (2) Plaintiff’s Motion for Attorneys’
Fees Incurred After Entry of Judgment, filed on July 19, 2012, seeking fees incurred
defending against Defendants’ Motion for Judgment Notwithstanding the Verdict
(“JNOV”) or, in the Alternative, for a New Trial, between May 1, 2012, and June 30,
2012, in the amount of $29,049.56; (3) Plaintiff’s Motion for Attorneys’ Fees and
Expenses Incurred on Appeal to the North Carolina Court of Appeals, filed on June
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Morris v. Scenera Research, LLC, 2017 NCBC 47.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION COUNTY OF WAKE 09 CVS 19678
ROBERT PAUL MORRIS,
Plaintiff,
v. FINAL JUDGMENT AND ATTORNEYS’ FEE AWARD SCENERA RESEARCH, LLC and RYAN C. FRY,
Defendants.
1. THIS MATTER is now before the Court on Plaintiff’s five motions
seeking an award of attorneys’ fees and expenses (hereafter collectively referred to as
“attorneys’ fees”) incurred at different stages of the litigation, and on Morris’s Motion
to Strike Defendants’ Reply to Morris’s Request for Pre-judgment Fees and Expenses
(“Motion to Strike”). For the reasons discussed below, the Court DENIES Plaintiff’s
Motion to Strike and awards Plaintiff attorneys’ fees in the amount of $843,405.59.
Young Moore and Henderson, P.A., by Walter E. Brock, Jr. and Andrew P. Flynt, for Plaintiff.
Parker Poe Adams & Bernstein LLP, by Catharine B. Arrowood and Scott E. Bayzle, for Defendants.
Gale, Chief Judge.
I. MATTER BEFORE THE COURT AND SUMMARY OF AWARD
A. Background
2. This case was tried before a jury in January 2012. At the conclusion of
the trial, Plaintiff had prevailed on his statutory claims for unpaid wages and retaliatory discharge, and Defendant Scenera Research, LLC (“Scenera”) had
prevailed on the invention and patent ownership claims. This Court entered the
Judgment based on the jury verdict on May 14, 2012 (“2012 Judgment”). The case
has now returned to this Court, after appeals to the North Carolina Court of Appeals
and the North Carolina Supreme Court, for resolution of the sole issue of Plaintiff’s
award of attorneys’ fees.
3. Ultimately, each aspect of the 2012 Judgment was upheld after appeals
to the Court of Appeals and Supreme Court, except the award of attorneys’ fees, which
the Court of Appeals reversed and remanded. Plaintiff successfully defended his
monetary recoveries on his wage and discharge claims, as well as his right to
attorneys’ fees on those claims, but unsuccessfully challenged other portions of the
2012 Judgment. Defendants successfully defended the ruling in their favor that
Plaintiff has no ownership rights in inventions made during the course of his
employment or in patent applications or issued patents related to those inventions,
which the Court refers to as “ownership claims.”
4. In the 2012 Judgment, the Court, in its discretion, awarded Plaintiff
$450,000 of the $819,752.41 requested for fees incurred up to the time of judgment.
Morris v. Scenera Research, LLC, No. 09-CVS-19678, 2012 NCBC LEXIS 29, at *30–
33 (N.C. Super. Ct. May 14, 2012), aff’d in part and rev’d in part, 229 N.C. App. 31,
747 S.E.2d 362 (2013), aff’d in part and rev’d in part, 368 N.C. 857, 788 S.E.2d 154
(2016). While the Court found that all of Plaintiff’s fees had been reasonably incurred
and charged at reasonable rates, it concluded that the request should be reduced to make the award “reasonable in relation to the results obtained.” Hensley v.
Eckerhart, 461 U.S. 424, 440 (1983); see Morris, 2012 NCBC LEXIS 29, at *30–33.
In doing so, the Court determined that fees should be apportioned between Plaintiff’s
successful and unsuccessful claims.
5. In reversing this Court’s award of attorneys’ fees, the Court of Appeals
stated that
[o]n appeal, Morris argues that the business court erred by allocating among legal claims—and thereby reducing his award of attorneys’ fees—because (1) claims that arise from a common nucleus of operative facts should not be allocated; (2) the business court “failed to make any findings of fact or offer any conclusions of law on whether Morris’s claims and Defendants’ counterclaims [arose] from a common nucleus of operative fact[ ]”; and (3) the parties’ claims did, in fact, arise from a common nucleus of operative fact. We agree with Morris’s first two arguments and refrain from addressing the third.
Morris, 229 N.C. App. at 56, 747 S.E.2d at 377–78 (alterations in original) (emphasis
added) (quoting Brief for Plaintiff/Cross-Appellant at 22–23, Morris, 229 N.C. App.
31, 747 S.E.2d 362 (No. COA12-1481)). In short, the Court of Appeals’ holding
essentially mandates that Plaintiff must recover all fees related to any claim arising
from a nucleus of operative facts common to his successful wage and discharge claims.
6. The parties cross-appealed other issues to the North Carolina Supreme
Court, but neither party appealed the Court of Appeals’ holding on the award of
attorneys’ fees.
7. The Court has been directed to make fact findings as to which fees
incurred prior to the 2012 Judgment relate to claims that arise from a nucleus of
operative facts common to Plaintiff’s successful claims. See Morris, 2016 NCBC LEXIS 101, at *27; see also Morris, 229 N.C. App. at 56, 747 S.E.2d at 377–78. In
directing that no fees should be apportioned if they arise from a nucleus of operative
facts common to Plaintiff’s successful claims, the Court of Appeals severely limited
the Court’s discretion.1 Earlier Court of Appeals decisions had held that a trial court
is not required to apportion fees among successful and unsuccessful claims, but had
not prohibited a trial court from apportioning fees between claims in order to award
an amount that would be reasonable in relation to the plaintiff’s overall success.
Unfortunately, the elimination of that discretion has led, and will likely lead in other
cases, to extended litigation over which fees relate to which claims. This case also
presents the unsettled question whether a plaintiff can, in addition to the initial
award of attorneys’ fees, recover fees incurred in defending the initial award.
8. Further background on this litigation is available in the multiple
reported decisions issued as the case wound through the trial and appellate process.
See, e.g., Morris, 368 N.C. 857, 788 S.E.2d 154, aff’g in part and rev’g in part 229 N.C.
App. 31, 747 S.E.2d 362, aff’g in part and rev’g in part 2012 NCBC LEXIS 29; Morris
v. Scenera Research, LLC, No. 09-CVS-19678, 2016 NCBC LEXIS 101 (N.C. Super.
Ct. Dec. 19, 2016); Morris v. Scenera Research, LLC, No. 09-CVS-19678, 2012 NCBC
LEXIS 1 (N.C. Super. Ct. Jan. 4, 2012).
1 This Court considered this holding when entering its judgment in Out of the Box Developers, LLC, v. Doan Law, LLP, and found that it could, under the particular facts of that case, apportion fees. See No. 10-CVS-8327, 2014 NCBC LEXIS 39, at *23–25 (N.C. Super. Ct. Aug. 29, 2014). That judgment was not appealed. B. Plaintiff’s Five Attorneys’ Fees Motions
9. The attorneys’ fees motions now before the Court are (1) Plaintiff’s
Motion for Supplemental Relief, filed on March 7, 2012, and supplemented on April
18, 2012, and May 10, 2012, seeking fees incurred through April 30, 2012, in the
amount of $819,752.41 (“Prejudgment Fees”); (2) Plaintiff’s Motion for Attorneys’
Fees Incurred After Entry of Judgment, filed on July 19, 2012, seeking fees incurred
defending against Defendants’ Motion for Judgment Notwithstanding the Verdict
(“JNOV”) or, in the Alternative, for a New Trial, between May 1, 2012, and June 30,
2012, in the amount of $29,049.56; (3) Plaintiff’s Motion for Attorneys’ Fees and
Expenses Incurred on Appeal to the North Carolina Court of Appeals, filed on June
28, 2016, seeking fees incurred during the appeal to the North Carolina Court of
Appeals between July 1, 2012, and September 5, 2013, in the amount of $133,027.16;
(4) Plaintiff-Appellee/Cross-Appellant’s Motion for Attorneys’ Fees Incurred on
Appeal, filed with the Supreme Court on June 22, 2016, and remanded to this Court,
seeking fees incurred during the appeal to the North Carolina Supreme Court
between September 6, 2013, and May 19, 2015, in the amount of $163,101.83; and
(5) Plaintiff’s Motion for Attorneys’ Fees Incurred After the North Carolina Supreme
Court’s Decision, filed March 9, 2017, seeking fees incurred between June 10, 2016,
and February 28, 2017, on the remanded issue of attorneys’ fees in the amount of
$95,570.94 (collectively the “Motions”). Together, the Motions seek an award of
$1,240,501.90 in attorneys’ fees and also seek interest on that award. C. A Summary of The Award of Prejudgment Fees
10. In the following discussion, the Court divides its analysis between the
award of attorneys’ fees incurred prior the 2012 Judgment, which was reviewed by
the Court of Appeals, and the award of attorneys’ fees incurred after judgment, which
has not been reviewed by the Court of Appeals. The Court expressly incorporates its
December 19, 2016 Order and Opinion on Request for Attorneys’ Fees (“December
Order”), which summarized its understanding of the Court of Appeals’ mandate
regarding the award of prejudgment attorneys’ fees. See Morris, 2016 NCBC LEXIS
101, at *27–32.
11. The Court concludes that a substantial portion of Plaintiff’s efforts
related to a nucleus of facts common to all claims because the efforts and claims were
inextricably intertwined. See Hensley, 461 U.S. at 435 (“Much of counsel’s time [was]
devoted generally to the litigation as a whole, making it difficult to divide the hours
expended on a claim-by-claim basis.”); Okwara v. Dillard Dep’t Stores, Inc., 136 N.C.
App. 587, 595, 525 S.E.2d 481, 487 (2000) (explaining that the determination of
whether claims are inextricably interwoven is to be determined in the court’s
discretion). It is now difficult to parse those efforts between individual claims on
which Plaintiff succeeded and those which he did not. The Court’s award of attorneys’
fees in the 2012 Judgment was not based on parsing efforts between successful and
unsuccessful claims.
12. The 2012 Judgment did not reduce the award of attorneys’ fees based on
findings that certain fees were related distinctly to claims that did not relate to the common nucleus of operative facts. Rather, the Court exercised its discretion to
reduce the fee award to insure that the award was reasonable in relation to Plaintiff’s
success. To the extent that the Court of Appeals’ reversal of the 2012 Judgment
rested on this Court’s failure to adequately explain the factors it considered in making
its discretionary award, in the following discussion, the Court will further explain its
reasons for concluding, and continuing to conclude, that the award of $450,000 in the
2012 Judgment is the appropriate award of prejudgment fees.
13. But the Court of Appeals’ mandate now requires this Court to make
findings as to which efforts were related to the nucleus of operative facts common to
Plaintiff’s successful claims and then to apportion only those fees not related to that
common nucleus. The Court will, as best it can, determine which fees can be deducted
from Plaintiff’s requested amount in accordance with the Court of Appeals’ mandate.
Under this more restrictive standard, the Court determines that Plaintiff must be
awarded $670,315.56 of his requested $819,752.41 in Prejudgment Fees.
D. A Summary of The Award of Postjudgment Fees
14. Plaintiff seeks to recover all fees incurred after the 2012 Judgment.
Defendants contend that there is no statutory authority for Plaintiff to recover any
fees incurred after the 2012 Judgment. For the reasons explained below, the Court
concludes that the governing statutes allow the Court, in its discretion, to award
Plaintiff fees incurred to defend the judgment in his favor, including fees necessary
to defend his right to recover attorneys’ fees. There is a clear basis to separate fees
incurred on appeal among various claims, and Plaintiff is not entitled to recover fees that were incurred on appeal in his unsuccessful attempt to reverse rulings adverse
to him. The Court awards Plaintiff a total of $173,090.03 of the $420,749.49
requested for fees incurred after the 2012 Judgment.
II. PLAINTIFF’S PREJUDGMENT ATTORNEYS’ FEES
A. Plaintiff’s Motion to Strike Defendants’ Reply Brief Is Denied.
15. As a preliminary matter, the Court denies Plaintiff’s Motion to Strike
Defendants’ Reply to Morris’s Request for Pre-Judgment Fees and Expenses. The
Court’s ruling does not depend on Defendants’ reply.
B. The Court’s Reasons in Support of Its Discretionary Award of $450,000 in Prejudgment Fees in the 2012 Judgment
16. The Court was confident that it had broad discretionary authority to
determine the appropriate attorneys’ fee award. First, any award of attorneys’ fees
must have a statutory basis, and in this case, the authorities for Plaintiff’s award of
attorneys’ fees are N.C. Gen. Stat. § 95-25.22(d) (the “Wage and Hour Act” or “WHA”)
and N.C. Gen. Stat. § 95-243(c) (the “Retaliatory Discharge Act” or “REDA”). Both
statutes allow for the award of attorneys’ fees, but do not mandate such an award.
See N.C. Gen. Stat. § 95-25.22(d) (2015) (“The court, in any action brought under this
Article may, in addition to any judgment awarded plaintiff, order costs and fees of the
action and reasonable attorneys’ fees to be paid by the defendant.”); id. § 95-243(c)(4)
(“The court may award to the plaintiff and assess against the defendant the
reasonable costs and expenses, including attorneys’ fees, of the plaintiff in bringing
an action pursuant to this section.”) (emphasis added). 17. Second, when entering the 2012 Judgment, this Court sought to
faithfully implement the directive of the United States Supreme Court in Hensley v.
Eckerhart, which had been adopted by the North Carolina Court of Appeals in
Whitesides Estates, Inc., v. Highlands Cove, LLC, 146 N.C. App. 449, 467, 553 S.E.2d
431, 443 (2001) and in Hamilton v. Memorex Telex Corp., 118 N.C. App. 1, 16–17, 454
S.E.2d 278, 286 (1995). Hensley directs that a trial court should exercise its discretion
to grant an award of attorneys’ fees that is “reasonable in relation to the results
obtained.” 461 U.S. at 440. To make a reasonable award of attorneys’ fees, the trial
court should first eliminate all fees solely related to a claim on which the plaintiff did
not prevail if that claim is “distinct in all respects from his successful claims,” and
second, from the remaining fees, the court should award an amount that is reasonable
in relation to the outcome of the litigation. Id. More specifically, Hensley explains
that
[w]here the plaintiff has failed to prevail on a claim that is distinct in all respects from his successful claims, the hours spent on the unsuccessful claim should be excluded in considering the amount of a reasonable fee. Where a lawsuit consists of related claims, a plaintiff who has won substantial relief should not have his attorney’s fee reduced simply because the district court did not adopt each contention raised. But where the plaintiff achieved only limited success, the district court should award only that amount of fees that is reasonable in relation to the results obtained. Id.
18. The Court reads the second prong of the Hensley standard to allow, if
not encourage, trial courts to reduce the amount of attorneys’ fees requested if doing
so is necessary to make the award reasonable in relation to the litigation outcome.
Id.; 461 U.S. at 435 (explaining that in cases where “[m]uch of counsel’s time will be devoted generally to the litigation as a whole . . . the district court should focus on the
significance of the overall relief obtained by the plaintiff in relation to the hours
reasonably expended on the litigation.”)
19. This Court does not read Hensley, or prior North Carolina Court of
Appeals’ opinions adopting Hensley, to only allow trial courts to eliminate fees that
were distinctly related to claims on which the plaintiff did not succeed. The Court of
Appeals has held that a trial court is not obligated to reduce fees where a plaintiff did
not succeed on all claims if those claims “stem from a common nucleus of law or fact,”
but that holding did not prohibit a trial court from reducing the award of attorneys’
fees, especially if such a reduction is necessary to make the award reasonable in
relation to the plaintiff’s overall success. Okwara, 136 N.C. App. at 595, 525 S.E.2d
at 486; see also Whitesides Estates, Inc., 146 N.C. App. at 467, 553 S.E.2d at 443
(“[W]here all of plaintiff’s claims arise from the same nucleus of operative facts and
each claim was ‘inextricably interwoven’ with the other claims, apportionment is
unnecessary,” but not prohibited (quoting Okwara, 136 N.C. App. at 596, 525 S.E.2d
at 487)). To the contrary, the Court of Appeals had emphasized that the
determination of whether to allocate fees “is left largely to the discretion of the trial
courts,” and that “‘reasonableness, not arbitrary classification of attorney activity, is
the key factor under all [North Carolina] attorneys’ fees statutes’ in awarding fees for
attorney activity.” Okwara, 136 N.C. App. at 595, 525 S.E.2d at 487; Whitesides
Estates, Inc., 146 N.C. App. at 467, 553 S.E.2d at 443 (quoting Coastal Prod. Credit
Ass’n v. Goodson Farms, Inc., 70 N.C. App. 221, 228, 319 S.E.2d 650, 656 (1984)). The Court read Hensley, Okwara, and Whiteside to be consistent in holding that the fee
award is ultimately a discretionary one.
20. When applying the Hensley standard, the Court concluded the second
step was the most important, because it found that the ownership claims on which
Plaintiff was unsuccessful were not “distinct in all respects” from Plaintiff’s successful
claims. 461 U.S. at 440. The Court determined that there was a substantial overlap
in the underlying fact record on which the statutory claims and ownership claims
were based; therefore, it did not exclude fees under the first step of the Hensley
standard.
21. However, it was clear that Plaintiff’s total request for fees should be
significantly reduced to achieve a reasonable relationship between the award and the
outcome of the litigation. See Hensley, 461 U.S. at 436 (explaining that where a
plaintiff achieves only limited success, “even where the plaintiff’s claims were
interrelated,” the total request for attorneys’ fees “may be an excessive amount” and
the trial court must reduce the amount so that is reasonable in relation to “the degree
of success obtained”). The addition of the ownership claims complicated and
prolonged the resolution of the WHA and REDA claims. The Court found that the
request for attorneys’ fees was excessive due to Plaintiff’s aggressive pursuit of the
ownership claims and the extent of Plaintiff’s efforts that were dedicated solely to
avoid the impact of the hired-to-invent doctrine.
22. In sum, when awarding $450,000 in Prejudgment Fees under the WHA
and the REDA in the 2012 Judgment, the Court concluded, in its discretion, and based on its understanding of the Hensley two-part standard and its intimate
familiarity with the pretrial and trial proceedings, that this award was fair and
reasonable in relation to the results that Plaintiff obtained in this litigation.
23. If it had the discretion to do so, the Court would again award $450,000
of the requested $819,752.41 in Prejudgment Fees. But the Court unfortunately
concludes that it no longer has such discretion under the Court of Appeals’ mandate.
Morris, 2016 NCBC 101, at *27; see also Morris, 229 N.C. App. at 58, 747 S.E.2d at
379. The Court now attempts to determine which fees should be eliminated from
Plaintiff’s request for attorneys’ fees because they do not relate to the nucleus of
operative facts common to Plaintiff’s statutory claims.
C. Findings of Fact to Support Fee Deductions in Accordance with the Court of Appeals’ Mandate
24. The Court of Appeals purports to follow the two-step Hensley standard,
but it effectively applies the first step and ignores the second step. While Plaintiff
has the initial burden of demonstrating that he is entitled to attorneys’ fees, Hensley,
461 U.S. at 437, the Court has found that all fees were appropriately documented,
were reasonably incurred, and were billed at reasonable rates. See Morris, 2012
NCBC LEXIS 29, at *31. Based on those undisturbed findings, under the Court of
Appeals’ mandate, awarding attorneys’ fees becomes mandatory if they relate to the
common nucleus of operative facts relevant to Plaintiff’s successful claims, and the
Court has no discretion to otherwise reduce the requested amount to an amount that
is reasonable in relation to Plaintiff’s success in the litigation. 25. The Court’s December Order called for evidentiary presentations on the
issue of which fees should be excluded. Defendants challenge several categories of
fees, which the Court will now address.
(1) Fees in connection with Plaintiff’s motions to compel
26. Defendants urge the Court to deny $92,858.32 of fees incurred in
connection with Plaintiff’s two motions to compel. (Bayzle Aff. Supp. Defs.’ Position
Statement Pre-Judgment Fees and Expenses (“Prejudgment Bayzle Aff.”) Ex. A.) The
Court cannot deduct these fees because Plaintiff’s efforts in pursuing those motions
were related to the common nucleus of operative facts.
27. There were two separate motions to compel, both of which were filed in
federal court but resolved in this Court after the case was remanded. The first motion
to compel raised a dispute as to whether Defendants were obligated to produce
electronically stored information (“ESI”) either in the form in which it was kept in
the usual course of business or segregated as to the particular document requests to
which it was responsive. The motion presented issues of first impression for North
Carolina state courts relating to the production of ESI. The Court entered an interim
order that directed Defendants to make efforts to produce an index of source files
from which ESI had been taken to enable Plaintiff to determine the source of the ESI.
After the interim order was entered, the parties reported that they had resolved the
motion. 28. The Court finds that Plaintiff’s efforts on the first motion to compel were
related to developing the nucleus of operative facts common to Plaintiff’s statutory
claims.
29. Nevertheless, Defendants argue that the Court cannot allow Plaintiff to
recover fees for those efforts because its earlier order denied fees under Rule 26.
Those fees should not be disallowed on the basis that efforts related to Plaintiff’s first
motion to compel were part of Plaintiff’s “losing aspects” of the litigation. See Thomas
v. Cooper Indus., Inc., 640 F. Supp. 1374, 1379 (W.D.N.C. 1986) (holding that
plaintiffs could still be awarded fees incurred in litigating discovery motions on which
they lost).
30. The second motion to compel asked the court for an in camera review of
communications between Scenera and its in-house counsel, Stephen Tytran. The
privilege issue was complicated by the fact that Mr. Tytran had both legal and
business responsibilities for Scenera. Mr. Tytran was a critical fact witness because
of his conversations with Plaintiff regarding Plaintiff’s employment and the
circumstances surrounding Plaintiff’s termination. The Court examined the
challenged communications in camera and concluded that the claim of privilege was
appropriate for each communication. The Court denied the motion to compel and also
declined to award fees or costs pursuant to Rule 37.
31. While the motion was not successful, the Court concludes that Plaintiff
was reasonable in requesting the Court’s in camera review and that the motion was related to developing the nucleus of operative facts common to Plaintiff’s successful
statutory claims.
32. In sum, following the Court of Appeals’ mandate, the Court rejects
Defendants’ challenge to the $92,858.32 of fees related to Plaintiff’s motions to
compel.
(2) Fees for efforts involving intellectual property lawyers
33. Defendants challenge a total of $99,058.71 of fees incurred by, or in
connection with, intellectual property counsel, contending that those fees are related
solely to Plaintiff’s unsuccessful ownership claims. (Defs.’ Position Statement Pre-
Judgment Fees and Expenses (“Defs.’ Prejudgment Statement”) 6.) Of this amount,
$71,673.71 represents services by Tony Biller and his firm, Coats & Bennett, PLLC.
(Prejudgment Bayzle Aff. Ex. B, at 16.) Mr. Biller’s efforts, however, were not limited
to the ownership claims. In particular, Mr. Biller led negotiations with Scenera
concerning Plaintiff’s wage claim and participated in a September 16, 2009 mediation
seeking to resolve all claims.
34. Mr. Biller continued as counsel of record, along with Walter E. Brock,
Jr. of Young Moore and Henderson, P.A. (“YMH”), during the early stages of litigation
in the federal and state court actions, and participated in early case management
conferences and motion practice. It appears that Mr. Biller was not actively involved
in the litigation after May 17, 2010. He formally withdrew as counsel of record on
April 14, 2011. Mr. Biller testified at trial as a fact witness, but did not bill for
testifying or preparing to testify. 35. Based on its review of the billing records, the Court was able to isolate
certain Coats & Bennett billing entries that are related distinctly to the invention
ownership or hired-to-invent issues, on which Plaintiff was unsuccessful. The Court
concludes that the following fees should be excluded on that basis:
August 27, 2009 $650.00
August 28, 2009 $899.25
September 3, 2009 $495.00
September 5, 2009 $82.50
September 8, 2009 $198.00
September 8, 2009 $487.50
April 25, 2011 $170.00
TOTAL: $2,982.25
(Morris’s Position Statement on Allocation of Pre-Judgment Att’ys’ Fees and
Expenses (“Pl.’s Prejudgment Statement”) App. A-2.)
36. The Court was unable to specifically isolate additional Coats & Bennett
time entries that are related solely and distinctly to ownership claims because many
of the time entries group together efforts related to the ownership claims as well as
efforts related to the wage and discharge claims. However, based on its familiarity
with the case and its review of Plaintiff’s billing records, the Court finds that is
reasonable to conclude that a significant portion of the efforts in this category were
spent distinctly on the ownership claims. The inability to make a more exact finding
is attributed to the grouped time entries that did not adequately detail separate efforts. (Pl.’s Prejudgment Statement App. A-2.) Plaintiff, rather than Defendants,
should bear the consequences of this grouped time keeping; therefore, the Court
concludes that an additional $20,000 should be deducted from the Coats & Bennett
fees.
37. Defendants separately challenge $20,726 of fees incurred by YMH in
conferences with Mr. Biller. (Prejudgment Bayzle Aff. Ex. C, at 8.) Most of those fees
were incurred prior to Mr. Biller’s withdrawal as counsel of record in this litigation.
Although there are some fees related to preparing for Mr. Biller’s trial testimony,
those efforts are directly related to Plaintiff’s successful statutory claims, because Mr.
Biller’s trial testimony was concentrated on the events preceding and leading up to
Plaintiff’s termination, laying the foundation for his REDA claim. The Court
concludes that the fees incurred to prepare Mr. Biller’s testimony are properly
included in the total efforts spent to develop the nucleus of operative facts common to
the statutory claims on which Plaintiff prevailed.
38. While there are no specific time records that isolate discussions between
Mr. Brock and Mr. Biller concerning solely the ownership issues, the Court concludes,
based on a total review of the records and its familiarity with the case, that it is
reasonable to assume that a portion of those conferences were related solely to the
ownership issues. Plaintiff’s generalized billing records prevent a more exact finding,
but the Court concludes that a total of $5,000 of the fees incurred by YMH in
conferences with Mr. Biller should be deducted. 39. Defendants next challenge an additional $4,602 of YMH fees related to
conferences with Mr. Filomena, an intellectual property lawyer formerly with Bose
McKinney & Evans, LLP, in connection with an intellectual property security
agreement. (Prejudgment Bayzle Aff. ¶ 9 & Ex. D.) The Court notes that a significant
portion of the $4,602 of fees related to general trial preparation by YMH attorneys,
but that some of those fees related specifically to conferences with Mr. Filomena. (See
Prejudgment Bayzle Aff. Ex. D; Pl.’s Prejudgment Statement App. A-1.) Plaintiff’s
generalized time entries prevent a more precise fact finding, but, for the same reasons
discussed above, the Court concludes that $2,500 of the $4,602 of fees challenged
should be deducted for time related to conferences on intellectual property matters
unrelated to Plaintiff’s successful claims.
40. Defendants next challenge $2,057 of YMH fees related to contract
negotiations with Cap-Val American Business Appraisers, LLC, including time for
reviewing and analyzing inventor services agreements and reexamination
proceedings at the United States Patent and Trademark Office. (See Prejudgment
Bayzle Aff. ¶ 10 & Ex. E.) The Court concludes that those fees should be excluded
because they are unrelated to the statutory claims on which Plaintiff prevailed.
41. In sum, the Court excludes $32,539.25 ($2,982.25 + $20,000 + $5,000 +
$2,500 + $2,057) from this category of Prejudgment Fees because those fees were
related to time spent solely on the ownership claims and not on developing the
nucleus of operative facts common to all claims. (3) Fees in connection with Scenera’s federal declaratory judgment action
42. Defendants concede that some efforts that Plaintiff expended in regard
to his wage and retaliatory discharge claims in the federal court action are properly
considered in his fee request. However, Defendants challenge $52,282.83 of fees
incurred in the federal action, which they contend related solely to the ownership
claims on which Plaintiff was unsuccessful. (Prejudgment Bayzle Aff. Exs. F to I.)
43. First, Defendants challenge $17,033.89 of fees related to Plaintiff’s
attack on the federal court’s diversity jurisdiction. (Prejudgment Bayzle Aff. Exs. F,
F-1.) Scenera’s federal action sought a declaration that Plaintiff was not entitled to
patent bonuses. See Amended Complaint ¶¶ 46–48, Scenera Research, LLC v. Morris,
No. 5:09-cv-412-FL (E.D.N.C. filed Feb. 10, 2010). Plaintiff’s statutory claims rested
on his assertion that he was fired for insisting on his right to patent bonuses. Any
finding by the federal court on that issue would affect Plaintiff’s statutory claims.
Therefore, it was proper for Plaintiff to ensure that his claims proceeded before a
court with jurisdiction over the claims. Notably, Plaintiff ultimately succeeded in
challenging the federal court’s jurisdiction. The Court concludes that it would be
improper to exclude the $17,033.89 of challenged fees.
44. Second, Defendants challenge $1,246.90 of fees incurred to oppose
Scenera’s motion to file a second amended complaint in federal court. (Prejudgment
Bayzle Aff. Exs. G, G-1.) For the same reasons discussed above, the Court concludes
that Plaintiff is entitled to those fees. 45. Third, Defendants challenge $24,788.50 of fees related to Plaintiff’s
motion to dismiss Scenera’s federal action and remand all claims to state court.
(Prejudgment Bayzle Aff. Exs. H, H-1.) For the same reasons stated above, the Court
concludes that Plaintiff is entitled to those fees.
46. Fourth, Defendants challenge $9,213.54 of fees related to the motion
practice before the federal court on Scenera’s fiduciary duty counterclaim.
(Prejudgment Bayzle Aff. Exs. I, I-1.) Scenera’s fiduciary duty claim was based on its
assertion that Plaintiff had a fiduciary duty to assist Scenera in the assignment and
prosecution of its patent applications but refused to do so. Viewed in isolation,
Scenera’s fiduciary duty counterclaim could be argued to be related distinctly to the
ownership claims. However, Scenera also employed this argument as an affirmative
defense to Plaintiff’s REDA claim and asserted that Plaintiff’s breach of his fiduciary
duty provided Scenera with an independent basis to terminate him. The jury rejected
that defense and ruled for Plaintiff on his REDA claim. The fees incurred in
defending against Scenera’s fiduciary duty claim cannot be segregated as being
totally distinct from the nucleus of operative facts common to the statutory claims on
which Plaintiff prevailed. Therefore, the fees should not be deducted.
47. In sum, the Court concludes that Plaintiff is entitled to all fees incurred
in connection with Scenera’s federal declaratory judgment action.
(4) Other pretrial fees incurred after remand of the federal action
48. Defendants contend that Plaintiff should not recover $1,388 of fees
incurred to answer Scenera’s counterclaims in state court, (Prejudgment Bayzle Aff. Ex. J,) or $26,703.12 of fees incurred in opposing Scenera’s fiduciary duty claim on
summary judgment in state court, (Prejudgment Bayzle Aff. Ex. K.) As noted above,
Plaintiff’s REDA claim and Scenera’s fiduciary duty claim are interrelated. However,
the Court concludes that the arguments presented on summary judgment included
some efforts that were related distinctly to whether Plaintiff’s employment contract
fell outside the hired-to-invent doctrine, meaning that Plaintiff had ownership rights
in the inventions. Therefore, the Court concludes that it is appropriate to deduct
$12,500 for those efforts.
49. Defendants next challenge $50,482.60 of fees related to opposing
Scenera’s motion for summary judgment on Scenera’s patent ownership claims and
the application of the hired-to-invent doctrine. (Prejudgment Bayzle Aff. Ex. L.) The
Court concludes that those fees should be excluded because they are solely related to
a claim on which Plaintiff did not prevail.
50. Defendants next contend that $89,747.58 of Plaintiff’s discovery-related
fees should be reduced by at least 27%, because 27% of Plaintiff’s written discovery
requests were related solely to Scenera’s intellectual property claims on which
Plaintiff was unsuccessful. (See Defs.’ Prejudgment Statement 19–20; Prejudgment
Bayzle Aff. Ex. M, at 54.) Defendants contend that certain interrogatories and
document requests related solely to the patent ownership issues. (Prejudgment
Bayzle Aff. ¶ 18 & Ex. M-2.) Plaintiff responds that any percentage deduction would
be arbitrary and without a real evidentiary basis because there was no discovery
directed solely to the patent ownership issues, as all issues turned on the determination of the terms of Plaintiff’s employment agreement. (See Pl.’s
Prejudgment Statement 15–16.)
51. After reviewing the records, the Court agrees with Defendants that at
least some of the discovery was related solely and distinctly to developing a record
concerning the ownership claims, and it would be unfair not to exclude some of
Plaintiff’s discovery fees. However, the Court does not accept the percentage
disallowance that Defendants suggest. The Court is unable to make a precise
calculation, but based on its management of the discovery and pretrial motion
process, it concludes that it is reasonable to allocate $20,000 of Plaintiff’s discovery
fees as incurred solely in connection with the ownership issues on which Plaintiff did
not succeed.
52. In sum, the Court disallows a total of $82,982.60 ($12,500 + $50,482.60
+ $20,000) from this category of pretrial fees.
(5) Fees incurred at trial
53. Plaintiff’s fees for trial are $190,039.55. (Prejudgment Bayzle Aff. Ex.
P, at 43.) Defendants argue that 40% of those fees should be excluded because
Plaintiff prevailed on only three of the five claims that the jury considered.
54. This percentage allocation is not consistent with the actual trial
proceeding and the time spent on the various claims. The Court had largely resolved
the ownership claims before trial through its summary judgment ruling, but allowed
Plaintiff the opportunity to present evidence that his negotiated employment
agreement made the hired-to-invent doctrine inapplicable to him. Very little of the trial evidence was directed to that issue. The Court directed a verdict in Defendants’
favor on the ownership claims. Therefore, efforts related to the ownership claims did
not equal 40% of either parties’ trial efforts.
55. The substantial portion of trial efforts must be attributed to the
statutory claims on which Plaintiff prevailed. Again, the Court cannot make a precise
calculation, but based on its familiarity with the trial proceedings, it concludes that
$15,000 of Plaintiff’s fees incurred at trial were distinctly related to claims on which
Plaintiff did not prevail and should be deducted.
(6) Posttrial fees incurred prior to judgment
56. Defendants challenge $3,915 of fees incurred in Plaintiff’s efforts to
avoid the Court’s entry of judgment in Scenera’s favor on the ownership claims.
(Prejudgment Bayzle Aff. Ex. Q, at 2.) Defendants’ challenge is well-taken, and those
fees will be excluded as related solely to claims on which Plaintiff did not succeed.
57. Defendants also challenge $7,207.66 of fees associated with Plaintiff’s
efforts to attach Scenera’s patents as security for the awards on Plaintiff’s statutory
claims. (Prejudgment Bayzle Aff. Ex. R, at 3.) The effort to attach patents as security
for Plaintiff’s statutory awards did not depend upon the assertion of an ownership
right. The Court did not allow for such attachment, primarily because it concluded
that the prosecution of the pending patent applications should proceed without
further interference. The Court concludes that Plaintiff’s fees incurred to secure his
award are recoverable. (7) Other fees incurred prior to judgment that Defendants contend are not supported by adequate time entries
58. Defendants contend that an additional total of $27,739, reflected in
Exhibit S to Mr. Bayzle’s affidavit on Prejudgment Fees, should be disallowed
because the supporting time entries are so generalized that it is impossible to
determine whether the efforts were directed to claims on which Plaintiff was
successful. (Prejudgment Bayzle Aff. Ex. S, at 28.) These include fee entries that
simply state “e-mail correspondence” without delineating the subject matter of the
correspondence, and entries that are partially redacted because a privilege is being
asserted. (Prejudgment Bayzle Aff. Ex. S.)
59. As noted earlier, Plaintiff has the burden to support his fee request.
However, courts have not imposed as exacting a standard as Defendants suggest.
Plaintiff must accept some responsibility where generalized time records do not allow
for a precise determination as to which claims the efforts are related. Based on its
review of more specific time entries, the Court concludes that it should not deduct the
full amount that Defendants contest, but that it is reasonable to attribute a portion
of those fees to the ownership claims. Therefore, the Court concludes that it is
appropriate to exclude $15,000 of those fees.
D. Summary as to Prejudgment Fees
60. Based on the reasons and findings stated above, the Court adheres to its
conclusion, as stated in the 2012 Judgment, that an award of $450,000 is appropriate
and bears a reasonable relation between the fees incurred and Plaintiff’s success in the litigation. If the Court had discretion to do so, it would again award Plaintiff
$450,000 in Prejudgment Fees.
61. But the Court understands it does not have this discretion. Pursuant to
the Court of Appeals’ mandate, the Court can only exclude fees related distinctly to
claims that are unrelated to the nucleus of operative facts in common with Plaintiff’s
wage and discharge claims. On that basis, the Court concludes that, even though the
award is excessive, Plaintiff should recover $670,315.56 of Prejudgment Fees—
calculated as $819,752.41 less $32,539.25 of fees related solely to efforts involving
intellectual property lawyers, less $82,982.60 of pretrial fees in state court for efforts
related distinctly to the ownership claims, less $15,000 of trial fees related solely to
the ownership claims, less $3,915 of fees related to efforts to avoid judgment in
Defendants’ favor on the ownership claims, less $15,000 for fees not adequately
supported by sufficiently specific time entries.
III. ATTORNEYS’ FEES INCURRED POSTJUDGMENT
62. The Court now considers Plaintiff’s four motions for fees incurred after
entry of the 2012 Judgment. The Court of Appeals did not review these motions.
63. As a preliminary matter relating to the several motions for recovery of
fees incurred after judgment, the Court has reviewed the underlying billing records
for each motion and finds that the fees represent efforts by lawyers with the
appropriate experience, training, and skill required for this litigation. The Court
further finds that the fees requested were adequately documented, reasonably incurred, and charged at rates both reasonable and commensurate with fees charged
by others with similar experience for similar litigation in the same locale.
A. Plaintiff Is Entitled to Fees Incurred in Defending the 2012 Judgment.
64. Defendants argue that the Court should summarily deny Plaintiff’s
motions for postjudgment fees because there is no statutory basis for awarding such
fees. They contend that the WHA and the REDA allow for the recovery of fees
incurred in obtaining a statutory award but not for fees incurred in defending those
awards. (Defs.’ Br. Opp’n to Pl.’s Mot. Atty’s’ Fees, Aug. 20, 2012, at 3.)
65. It is axiomatic that a plaintiff cannot recover attorneys’ fees absent
statutory authority. See Nohejl v. First Homes of Craven Cty., Inc., 120 N.C. App.
188, 191, 461 S.E.2d 10, 12 (1995). Neither the WHA nor the REDA specify whether
the discretion to award attorneys’ fees is limited to prejudgment fees. See N.C. Gen.
Stat. §§ 95-25.22(d), -243(c).
66. In other contexts, the North Carolina Court of Appeals has held that
once a trial court has made “a finding that [the prevailing party is] entitled to
attorney’s fees in obtaining their judgment, any effort by [that party] to protect that
judgment should likewise entitle them to attorney’s fees.” City Fin. Co. of Goldsboro
v. Boykin, 86 N.C. App. 446, 449, 358 S.E.2d 83, 85 (1987); see also Willen v. Hewson,
174 N.C. App. 714, 722, 622 S.E.2d 187, 193 (2005); Eley v. Mid/E. Acceptance Corp.
of N.C., 171 N.C. App. 368, 377, 614 S.E.2d 555, 562 (2005); Garlock v. Henson, 112
N.C. App. 243, 247, 435 S.E.2d 114, 116 (1993). The Court of Appeals explained that
where the statute is remedial, it “should be construed and applied liberally in order to grant [the prevailing party] an additional award of attorney’s fees for time spent
in protecting their judgment.” City Fin. Co. of Goldsboro, 86 N.C. App. at 450, 358
S.E.2d at 85.
67. The Court of Appeals’ holdings are consistent with several federal court
decisions holding that when “a plaintiff wins a suit and is entitled by statute to a
reasonable attorney’s fee, the entitlement extends to the fee he reasonably incurs in
defending the award of that fee,” because the purpose of the statutory fee award is to
make the party whole for the expenses incurred in prosecuting the claim. Gorenstein
Enters., Inc. v. Quality Care-USA, Inc., 874 F.2d 431, 438 (7th Cir. 1989); see also In
re John Richards Homes Bldg. Co., 552 F. A’ppx 401, 410 (6th Cir. 2013); Consolo v.
George, No. 94-1202, 1996 U.S. App. LEXIS 10196, at *3 (1st Cir. May 3, 1996); Se.
Legal Def. Grp. v. Adams, 657 F.2d 1118, 1126 (9th Cir. 1981); Young v. Kenley, 641
F.2d 192, 195 (4th Cir. 1981); Love v. Mayor of Cheyenne, 620 F.2d 235, 237 (10th Cir.
1980); Johnson v. Mississippi, 606 F.2d 635, 638–39 (5th Cir. 1979). If courts do not
allow for the recovery of appellate fees, then “the fee will undercompensate” the
prevailing party. Pickett v. Sheridan Health Care Ctr., 664 F.3d 632, 654 (7th Cir.
2011) (quoting Gorenstein Enters., 874 F.2d at 438).
68. The Court concludes that the legislative policy embodied in the WHA
and the REDA mandates that a court has discretion to award a prevailing party
postjudgment attorneys’ fees incurred to successfully defend the judgment in his
favor. Therefore, “Plaintiff should recover attorneys’ fees incurred on appeal that
directly benefited his ability to recover amounts awarded to him in the Court’s Judgment,” but not those fees “incurred on appeal in an effort to reverse rulings
adverse to him.” Morris, 2016 NCBC LEXIS 101, at *31.
B. Fees Incurred in Defending Against Defendants’ JNOV Motion
69. Based on the Court’s December Order, Plaintiff now seeks an award of
$24,875.62 of the $29,049.56 of attorneys’ fees incurred in successfully defending
against Defendants’ JNOV motion (“JNOV Fees”). (Morris’s Position Statement
Allocation Post-Judgment Att’ys’ Fees and Expenses (“Pl.’s Postjudgment
Statement”) 2 & App. 1; Suppl. Mem. Law Supp. Morris’s Pending Mot. Atty’s’ Fees
14.)
70. Defendants contend that the Court should apportion the JNOV Fees
among successful and unsuccessful claims. However, the requested fees related
exclusively to claims on which Plaintiff prevailed.
71. The Court finds and concludes that Plaintiff is entitled to an award of
$24,875.62 for attorneys’ fees and expenses incurred between May 1, 2012, and June
30, 2012, to defend against Defendants’ JNOV motion.
72. The Court rejects Defendants’ suggestion that this award should be
reduced because the motion seeking those fees was first filed when this Court was
functus officio.
C. Fees Related to The Appeals to The North Carolina Court of Appeals
73. Both parties appealed from the 2012 Judgment. Defendants were the
first to appeal. Plaintiff’s cross-appeal challenged this Court’s refusal to award
additional statutory damages and penalties and its refusal to allow Plaintiff to elect between the remedy of rescinding his prior assignments or accepting the award of
patent bonuses and liquidated damages. Morris, 229 N.C. App. at 48, 747 S.E.2d at
373.
74. At the Court of Appeals, Plaintiff successfully defended against
Defendants’ appeal attacking his WHA and REDA awards, but was unsuccessful on
his argument that this Court erred when it refused to award him additional
liquidated damages and penalties. Id. at 40, 50, 747 S.E.2d at 368, 374. Plaintiff
secured a Court of Appeals ruling in his favor on his election of remedies argument,
but that ruling was later reversed by the Supreme Court. See Morris, 268 N.C. at
868, 788 S.E.2d at 162. Plaintiff successfully challenged this Court’s decision to
reduce his prejudgment attorneys’ fees, and the Court of Appeals remanded the issue
to this Court for further findings of fact, as discussed above. Morris, 229 N.C. App.
at 58, 747 S.E.2d at 379. Defendants did not appeal the Court of Appeals’ ruling on
the attorneys’ fee issue to the Supreme Court.
75. Plaintiff first filed his motion in the Court of Appeals seeking an award
of attorneys’ fees incurred on the appeals before that court. On September 11, 2013,
the Court of Appeals denied that motion, finding that the motion should have been
filed with this Court. On June 28, 2016, Plaintiff filed his motion in this Court.
Plaintiff first sought a total of $133,027.16 of fees incurred in connection with the
appeals to the Court of Appeals (“Court of Appeals Fees”). (Mot. Att’ys’ Fees and
Expenses Incurred on Appeal N.C. Ct. Appeals 9.) Based on this Court’s December
Order, Plaintiff now contends that $63,099.83 of the Court of Appeals Fees should be awarded, because they were related directly to his statutory claims, which he
successfully defended on appeal.
76. Based on its review of Morris’s Position Statement on Allocation of
Postjudgment Attorneys’ Fees and Expenses (“Plaintiff’s Postjudgment Statement”)
and the unredacted billing records submitted in camera, the Court concludes that,
when calculating his request for $63,099.83, Plaintiff
eliminated fees for time spent on his cross-appeal that related solely to
the ownership issues;
eliminated fees for time spent on his attempt to stay execution of the
2012 Judgment in regard to patent assignments;
eliminated fees for time spent on the motion to show cause regarding his
failure to assign inventions;
included fees for time spent developing the appellate record for both
Defendants’ appeal and Plaintiff’s cross-appeal;
generally excluded time spent on researching and brief writing specific
to his cross-appeal, but evenly divided the time spent on research that
might be reasonably attributed to both appeals;
equally divided fees incurred in preparing for and presenting oral
argument where the billing entry showed that the preparation related
to both his successful and unsuccessful claims; and included fees from isolated entries where the oral argument preparation
was specific to issues raised only by Defendants’ appeal, such as entries
on May 19, 2013, and May 20, 2013.
77. Plaintiff’s Postjudgment Statement is largely consistent with the
Court’s December Order. However, the Court finds that the request improperly
includes $1,470 of fees for work related to Plaintiff’s challenge to the Court’s denial
of treble damages. This deduction reduces Plaintiff’s Court of Appeals Fees to
$61,629.83.
78. Defendants argue instead that Plaintiff’s maximum award for Court of
Appeals fees should be $33,260.33. (Defs.’ Position Statement Post-Judgment Fees
and Expenses (“Defs.’ Postjudgment Statement”) 8.) Defendants reach that number
by making the following deductions:
$67,796.50 of fees incurred exclusively on Plaintiff’s cross-appeal,
(Bayzle Aff. Supp. Post-Judgment Position Statement (“Postjudgment
Bayzle Aff.”) ¶ 4 & Ex. 2);
$14,127 of fees related to Plaintiff’s efforts to rescind patent
assignments, (Postjudgment Bayzle Aff. ¶ 5 & Ex. 3);
$2,481.50 of fees incurred to litigate the JNOV Fees motion,
(Postjudgment Bayzle Aff. ¶ 6 & Ex. 4);
$4,146 of fees incurred to make an improper filing of the motion for the
Court of Appeals Fees at the appellate court, (Postjudgment Bayzle Aff.
¶ 7 & Ex. 5); $752.50 of fees incurred during settlement negotiations, (Postjudgment
Bayzle Aff. ¶ 8 & Ex. 6);
$4,851.50 of fees associated with billing records that are redacted and
thus preclude any determination as to what efforts are represented by
the records, (Postjudgment Bayzle Aff. ¶ 9 & Ex. 7); and
$5,611.83 of the $11,223.66 of fees that Defendants contend are related
to both Plaintiff’s cross-appeal and their appeal, (Defs.’ Postjudgment
Statement 8.)
79. After reviewing Defendants’ supporting affidavits, the Court concludes
that some of Defendants’ deductions are proper, but others are not. Based on those
affidavits, the Court concludes that the maximum deductions should be:
(1) $59,191.50 of fees related solely to Plaintiff’s cross-appeal; (2) $14,127 of fees
related to efforts to rescind patent assignments; (3) $1,118 of fees attributed to filing
the motion for Court of Appeals Fees at the Court of Appeals; and (4) $376.25 of fees
attributed to settlement discussions. Those deductions would reduce Plaintiff’s
request from $133,027.16 to $58,214.41.
80. Having considered the arguments of all parties, the Court awards
Plaintiff $58,214.41 for fees incurred in connection with proceedings before the Court
of Appeals.
D. Fees Related to The Appeals to The North Carolina Supreme Court
81. At the North Carolina Supreme Court, Plaintiff was successful in
defending his recovery of patent bonuses based on patents not yet issued. Plaintiff was unsuccessful on his challenge to this Court’s directed verdict on ownership claims
and its refusal to award additional liquidated damages or penalties on the statutory
82. Plaintiff initially filed a motion on July 17, 2016, seeking to recover all
the fees incurred while the case was on appeal before the North Carolina Supreme
Court, totaling $163,101.83 (“Supreme Court Fees”). (Suppl. Mem. Law Supp.
Morris’s Pending Mots. Att’ys’ Fees 15.) Plaintiff contends, pursuant to the Court’s
December Order, that $38,485.48 of those fees should be awarded, because they are
fairly attributed to the statutory claims on which Plaintiff succeeded. (Pl.’s
Postjudgment Statement 2.) Defendants contend that the Court should award no
more than $23,978.97 of the Supreme Court Fees. (Defs.’ Postjudgment Statement
17.)
83. Plaintiff submitted a chart showing which billing entries were included
to support his request for $38,485.48 of the Supreme Court Fees. (Pl.’s Postjudgment
Statement 2 & App. 3.) Based on its review of the chart and supporting records, the
Court concludes that, when making his calculation, Plaintiff
included fees incurred to oppose the amici filing that challenged both
the award of patent bonuses and the rescission claim, but allocated the
time spent between the claims and sought only the fees related to his
successful claim;
excluded fees incurred to oppose the amici filings that addressed solely
the recession claim on which he was unsuccessful; excluded fees related solely to his unsuccessful challenges to the 2012
Judgment; and
allocated fees incurred for efforts directed toward both his successful
and unsuccessful claims on an entry-by-entry basis, with variable
percentages, sometimes allocating only 25% of a particular fee entry to
his successful claims.
84. Defendants reach their amount by first excluding two categories of fees
altogether—(1) $9,007 of fees incurred to value Scenera’s patent portfolio and (2)
$45,099.50 of fees related solely to Plaintiff’s unsuccessful cross-appeal. (Defs.’
Postjudgment Statement 17; Postjudgment Bayzle Aff. ¶¶ 10–11 & Exs. 8, 9.) After
these exclusions, Defendants apply a 22% ratio to the remaining fees.
85. After review, the Court concludes that Plaintiff did not include any of
the fees from Defendants’ first excluded category in his revised request for Supreme
Court Fees. As to Defendants’ second excluded category of fees, the Court concludes
that Plaintiff, for the most part, included only the percentage of these fees that
related to his successful claims and excluded those fees related solely to his
unsuccessful cross-appeal. (See Pl.’s Postjudgment Statement App. 3.)
86. After reviewing the parties’ different allocations, the Court concludes
that Plaintiff should be awarded a total of $30,000 of his requested Supreme Court
Fees. E. Plaintiff Is Entitled to Recover Fees Incurred to Litigate and Defend His Award of Attorneys’ Fees.
87. The United States Supreme Court was prescient when it cautioned in
Hensley that “[a] request for attorneys’ fees should not result in a second major
litigation,” 461 U.S. at 437, which is exactly what has happened in this case.
Hundreds of thousands of dollars in fees have been incurred to litigate solely the
proper fee award. Many of these fees are attributed to filings necessary to make the
findings of fact mandated by the Court of Appeals. This Court has likewise expended
efforts to make those findings comparable to making detailed findings of fact and
conclusions of law in a complex civil bench trial. A trial court is uniquely positioned
to make a discretionary award of attorneys’ fees after considering all the factors
relevant to determining the reasonable relationship between efforts made and
success gained. This discretionary award cannot be easily reduced to detailed
findings of fact. When such fact finding is required, the parties must incur
substantial expense in evidentiary presentations and briefing solely on the attorneys’
fee issue.
88. The Court must now address whether fees incurred litigating and
defending a fee award (hereafter referred to as “fees on fees”) may be recovered.
There is no North Carolina precedent on this issue. The Court is, however, guided by
decisions of federal courts and other state courts that have interpreted comparable
statutes, including the federal Fair Labor Standards Act (the “FLSA”), which has the
same policies and purpose as North Carolina’s WHA. (1) Plaintiff may recover fees incurred in litigating an award authorized by N.C. Gen. Stat. §§ 95-25.22 and 95-243.
89. The parties cite no North Carolina case on whether the Court can award
fees incurred in defending a fee award under the WHA or the REDA, and the Court
has found no case on this point. More generally, the North Carolina Court of Appeals,
has recognized “that the trial court has the authority to award attorney’s fees for all
phases of a case,” and that attorneys’ fee provisions in remedial statutes should be
construed liberally in order “to accomplish the purpose of the Legislature.” City Fin.
Co. of Goldsboro, 86 N.C. App. at 449–50, 358 S.E.2d at 85 (quoting Hicks v.
Albertson, 284 N.C. 236, 239, 200 S.E.2d 40, 42 (1973)).
90. “The North Carolina Wage and Hour Act is modeled after the Fair Labor
Standards Act,” Laborers’ Int’l Union v. Case Farms, Inc., 127 N.C. App. 312, 314,
488 S.E.2d 632, 634 (1997), and the attorneys’ fee provisions in the FLSA and North
Carolina’s WHA are similarly worded. Compare 29 U.S.C. § 216(b) (2012) (“The court
in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs,
allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.”),
with N.C. Gen. Stat. § 95-25.22(d) (“The court, in any action brought under this
Article may, in addition to any judgment awarded plaintiff, order costs and fees of
the action and reasonable attorneys’ fees to be paid by the defendant.”).
91. The majority of federal circuit courts have held that, where a party is
entitled to a statutory award of fees, “the time expended by attorneys in obtaining a
reasonable fee is justifiably included in . . . the court’s fee award,” including both the
“time spent preparing the fee petition and time devoted to litigating the amount of the award at the fee hearing.” Bagby v. Beal, 606 F.2d 411, 416 (3d Cir. 1979) (quoting
Prandini v. Nat’l Tea Co., 585 F.2d 47, 53 (3d Cir. 1978)); see also Pickett, 664 F.3d at
654 (quoting Gorenstein Enters., 874 F.2d at 438); Consolo, 1996 U.S. App. LEXIS
10196, at *3 (citing Lund v. Affleck, 587 F.2d 75, 77 (1st Cir. 1978)); Jorstad v. IDS
Realty Tr., 643 F.2d 1305, 1315 (8th Cir. 1981); Young, 641 F.2d at 195; Love, 620
F.2d at 237; Johnson, 606 F.2d at 638–39; Gagne v. Maher, 594 F.2d 336, 344 (2d Cir.
1979); Weisenberger v. Huecker, 593 F.2d 49, 54 (6th Cir. 1979).
92. As explained by the United States Court of Appeals for the Third
Circuit, the recovery of fees on fees “comport[s] with the purpose behind most
statutory fee authorizations,” which is to encourage “attorneys to represent indigent
clients and to act as private attorneys general in vindicating congressional policies.”
Bagby, 606 F.2d at 416 (quoting Prandini, 585 F.2d at 53). “If an attorney is required
to expend time litigating his fee claim, yet may not be compensated for that time, the
attorney’s effective rate for all the hours expended on the case will be correspondingly
decreased,” and “attorneys may become wary about taking . . . cases for which
attorneys’ fees are statutorily authorized.” Id. (quoting Prandini, 585 F.2d at 53).
93. The United States Court of Appeals for the D.C. Circuit adopted that
reasoning and held that fees incurred in litigating the fee award authorized by the
FLSA should be awarded. Laffey v. Nw. Airlines, Inc., 746 F.2d 4, 11 (D.C. Cir. 1984),
overruled on other grounds by Save Our Cumberland Mountains, Inc. v. Hodel, 857
F.2d 1516, 1517 (D.C. Cir. 1988). Additionally, if fees on fees were not awarded, then
“a deep pocket losing party” could “dissipate the incentive provided by an award through recalcitrance and automatic appeals.” Souza v. Southworth, 564 F.2d 609,
614 (1st Cir. 1977).
94. There is also case law from several state courts that is consistent with
those federal decisions and allows for the award of fees on fees. See, e.g., Serrano v.
Unruh, 652 P.2d 985, 997 (Cal. 1982) (holding that, “absent circumstances rendering
the award unjust, fees recoverable under section 1021.5 [of California’s Code of Civil
Procedure] ordinarily include compensation for all hours reasonably spent, including
those necessary to establish and defend the fee claim”); Stifel Fin. Corp. v. Cochran,
809 A.2d 555, 560–61 (Del. 2002) (holding that the reason for awarding “fees on fees”
in workers’ compensation claims is equally applicable for awarding attorney’s fees for
time spent on a fee application under other sections of Delaware’s Code); Digiacomo
v. Bd. of Pub. Educ., 507 A.2d 542, 547 (Del. 1986) (holding “that it is appropriate to
award attorney’s fees for time spent in determining the amount of the fee award” and
“adopt[ing] the rationale of the Third Circuit Court of Appeals in Bagby v. Beal”);
Winn-Dixie Stores, Inc. v. Reddick, 954 So. 2d 723, 731 (Fla. Dist. Ct. App. 2007)
(stating that a party seeking entitlement to attorneys’ fees pursuant to Florida’s Civil
Rights Act can receive an award of fees for time spent establishing their entitlement
to that fee); Robb v. Ridgewood Bd. of Educ., 635 A.2d 586, 595 (N.J. Super. Ct. Ch.
Div. Aug. 30, 1993) (“When an award of attorneys’ fees is statutorily
authorized . . . the reasonable expenses of preparing the fee application should be
included in the award.”); Vill. of W. Unity ex rel. Beltz v. Merillat, 861 N.E.2d 902,
907–08 (Ohio Ct. App. 2006) (holding that the failure to compensate an attorney for the time spent preparing the attorney fee argument, without any explanation, would
not correspond to the purpose behind most statutory fee authorizations); Hollen v.
Hathaway Elec., Inc., 584 S.E.2d 523, 527–28 (W. Va. 2003) (holding that “the time
expended by attorneys in obtaining a reasonable fee is justifiably included . . . in the
court’s fee award” under West Virginia’s Wage Payment and Collection Act (quoting
Prandini, 585 F.2d at 53)).
95. A decision of the Supreme Court of West Virginia is particularly
instructive when considering an award based on North Carolina’s WHA because the
statutory authorization for attorneys’ fees in West Virginia’s Wage Payment and
Collection Act (“West Virginia Act”) is virtually identical to the North Carolina
statute. See Hollen, 584 S.E.2d at 527–28. The West Virginia Act provides that “[t]he
court in any action brought under this article may, in the event that any judgment is
awarded to the plaintiff or plaintiffs, assess costs of the action, including reasonable
attorney fees against the defendant.” W. Va. Code § 21-5-12(b). The West Virginia
Supreme Court explained that “the purpose of the fee shifting under the Act is that
the opportunity to recovery attorney’s fees makes it much more likely that the
provisions of the Act will be enforced, and that those it seeks to aid will be able to
benefit from its protections.” Hollen, 584 S.E.2d at 527. If the attorney were not
compensated for the time spent “preparing the fee petition and the legal arguments
necessary to support it. . . . the net effect would be to reduce the attorney’s hourly
rate for all the hours worked on the case,” which would undermine the purpose of the
statutory authorization of fees. Id. at 527–28. 96. The Court concludes that North Carolina’s appellate courts would likely
adopt the rationale of the federal and state decisions discussed above. The Court
therefore concludes that a plaintiff may recover fees on fees in connection with
litigating the proper fee to be awarded under N.C. Gen. Stat. §§ 95-25.22 and 95-243.
(2) Separate factors may guide a court’s discretion when awarding fees on fees.
97. Some courts have stated that the standard for awarding fees on fees
should not necessarily be the same as the standard employed in making the initial
fee award, because “limitations must be placed on the size of the[ ] fees,” if not “the
prospect of large fees later on may discourage early settlement of cases by rewarding
protracted litigation of both the [underlying] case and the attorney fee case.” Ne.
Ohio Coal. for the Homeless v. Sec’y of Ohio, 695 F.3d 563, 574 (6th Cir. 2012) (quoting
Coulter v. Tennessee, 805 F.2d 146, 151 (6th Cir. 1986), abrogated on other grounds
by Ne. Ohio Coal. for the Homeless v. Husted, 831 F.3d 686, 720 (6th Cir. 2016)).
98. Courts have determined that “lawyers should not recover fees for [fee
recovery] services at the same rate as for their work on the merits of the case.” Robb,
635 A.2d at 595. Additionally, courts have explained “that a fee award for hours
devoted to the preparation of a fee application should be reduced when the plaintiffs
do not achieve complete success on the fee petition.” Id.; see also Institutionalized
Juveniles v. Sec’y of Pub. Welfare, 568 F. Supp. 1020, 1034 (E.D. Pa. 1983), aff’d in
part and vacated in part on other grounds, 758 F.2d 897 (3d Cir. 1985). To determine
the reasonableness of the fees sought for litigating the underlying fee award, the
Seventh Circuit conducts a “comparison between the hours spent on the merits and the hours spent on the fee petitions” to discourage lawyers from “litigat[ing] fee issues
with greater energy and enthusiasm than they litigate any other type of issue.”
Spegon v. Catholic Bishop of Chi., 175 F.3d 544, 554 (7th Cir. 1999) (quoting Ustrak
v. Fairman, 851 F.2d 983, 988 (7th Cir. 1988)).
99. Other courts, however, have determined that the standard to determine
reasonableness of the underlying fee, as set forth in Hensley, is the same discretionary
standard that courts should use to calculate the appropriate fees on fees award. See
Comm’r, Immigration & Naturalization Serv. v. Jean, 496 U.S. 154, 161 (1990)
(explaining that, once a party establishes he is eligible for fees under the Equal Access
to Justice Act, “the district court’s task of determining what fee [on fee award] is
reasonable is essentially the same as that described in Hensley”); Ne. Ohio Coal. for
the Homeless, 831 F.3d at 722 (abrogating the presumptive 3% cap for the award of
fees on fees and deciding that “[t]he district court can correct any abuses at the fees
for fees stage under the [Hensley] ‘reasonableness’ standard”).
100. In addition to the reasoning in these cases, the Court additionally
concludes that a successful plaintiff should not be unduly penalized for responding to
a defendant who aggressively challenges the plaintiff’s right to recover any fees.
Overall, the Court should exercise its discretion to assign appropriate responsibility
for the extent of the fees on fees incurred when determining the appropriate amount
to award.
101. In sum, the Court concludes that the WHA and the REDA vest the Court
with discretionary authority to award attorneys’ fees incurred in defending an attorneys’ fee award on the underlying statutory claim. This discretion must be
exercised in a manner that protects the receipt of the initial attorneys’ fee award
without encouraging unnecessary protracted litigation on that fee award.
(3) Plaintiff’s fees incurred after remand from the Supreme Court
102. Plaintiff’s final motion requests $95,570.94 for attorneys’ fees and
expenses incurred since the remand of this matter from the North Carolina Supreme
Court. (Pl.’s Mot. Att’ys’ Fees Incurred After N.C. Supreme Ct.’s Decision 3.)
103. Defendants argue that Plaintiff should not be awarded any of his fees
incurred on remand because all efforts after remand resulted solely from Plaintiff
making an unreasonable lump-sum request for all his fees, instead of limiting his
request to only those fees related to his successful claims. That argument fails to
consider the Court of Appeals’ holding that fees incurred through trial should not be
apportioned among claims unless the fees were not related to a nucleus of operative
facts common to Plaintiff’s successful claims.
104. The Court has carefully reviewed Plaintiff’s billing records and first
concludes that a total of $3,910.07 should be disallowed because those fees resulted
from efforts to provide tax advice, to coordinate with new counsel, and to conduct
settlement discussions. This leaves a remaining claimed amount of $91,660.87. This
amount is clearly related to Plaintiff’s wage and discharge claims.
105. Taking into consideration the policy issues addressed by the various
courts as discussed above, and other relevant factors, the Court, in its discretion,
concludes that some portion of Plaintiff’s fees on fees should be disallowed. 106. The Court awards Plaintiff a total of $60,000 for fees incurred after
remand from the Supreme Court.
F. Plaintiff Is Not Entitled to Interest on His Attorneys’ Fee Award.
107. Plaintiff seeks interest on his attorneys’ fee award. In its 2012
Judgment, the Court awarded attorneys’ fees with interest, but the attorneys’ fee
award was reversed. On appeal, Defendants did not challenge the award of interest,
and the Court of Appeals did not discuss interest on the fee award. Defendants have
now, for the first time, challenged Plaintiff’s right to recover interest.
108. After further review and study of the appropriate authorities, the Court
concludes that it erred by awarding Plaintiff interest on the attorneys’ fee award in
the 2012 Judgment, and it cannot make such an award now.
109. A party recovers interest on judgments only if specifically authorized by
statute. See Pierce v. United States, 255 U.S. 398, 406 (1921). When granting a court
discretion to award attorneys’ fees, neither the WHA nor the REDA addresses
interest. The Court of Appeals specifically held that plaintiffs who had a successful
WHA claim “were not entitled to interest on the liquidated damages award” because,
“[w]hile section 95-25.22 states that interest may be recovered on the unpaid wages,
it does not provide that interest is payable on liquidated damages.” Hamilton, 118
N.C. App. at 16, 454 S.E.2d at 286; see N.C. Gen. Stat. § 95-25.22. In Hamilton v.
Memorex Telex Corp., while the Court of Appeals did not specifically address interest
on attorneys’ fees, it appeared to construe section 95-25.22 as allowing interest only
on the award of (1) unpaid minimum wages, (2) unpaid overtime compensation, and (3) unpaid wage amounts due pursuant to section 95-25.6 through 95-25.12, because
those are the only damages for which the statute specifically authorizes interest. 118
N.C. App. at 16, 454 S.E.2d at 286; see N.C. Gen. Stat. § 95-25.22(a).
110. The Court concludes that allowing interest on an attorneys’ fees award
under the WHA or the REDA would be inconsistent with the Court of Appeals
decision discussed above.
111. The Court has also considered N.C. Gen. Stat. § 24-5, which states, in
part, that “[a]ny . . . portion of a money judgment in an action other than contract,
except the costs, bears interest from the date of entry of judgment.” N.C. Gen. Stat.
§ 24-5(b) (2015). Plaintiff contends that attorneys’ fees should be classified as part of
the “money judgment,” particularly because both sections 95-25.22 and 95-243
separately state that the Court may award costs and attorneys’ fees, which
necessarily must be considered as separate awards. See id. § 95-25.22(d) (“The
court . . . may, in addition to any judgment awarded plaintiff, order costs and fees of
the action and reasonable attorneys’ fees to be paid by the defendant.”); id. § 95-243(c)
(“The court may award to the plaintiff . . . the reasonable costs and expenses,
including attorneys’ fees . . . .”).
112. Defendants instead contend that attorneys’ fees constitute “costs” as the
term is used in section 24-5(b), precluding an award of interest. In making their
argument, Defendants overstate the Court of Appeals’ holding in Nexsen Pruet, PLLC
v. Martin, which held that “the trial court properly categorized the fees as costs,” but
it did so because it was considering N.C. Gen. Stat. § 7A-307, which specifically categorizes attorneys’ fees as a “[c]ost[ ] in administration of estates.” 212 N.C. App.
680, 683, 713 S.E.2d 130, 132 (2011); N.C. Gen. Stat. § 7A-307 (2015). The Court does
not believe that Nexsen Pruet’s holding controls the issue of interest on fee awards
under the WHA or the REDA.
113. Some federal courts have interpreted “money judgment” to include the
award of attorneys’ fees, meaning that interest is recoverable on such awards
pursuant to 28 U.S.C. § 1961(a). However, North Carolina’s general interest statute
directly excludes the award of interests on costs, while the comparable federal statute
does not. See N.C. Gen. Stat. § 24-5(b).
114. In sum, the Court concludes that Plaintiff is not entitled to interest on
the award of attorneys’ fees under the WHA or the REDA. Even if the award of
attorneys’ fees in the 2012 Judgment had not been reversed, Defendants would be
entitled to relief under Rule 60.
IV. FINAL JUDGMENT
115. The Court awards Plaintiff the sum of $670.315.56 for Prejudgment
Fees incurred from the inception of the litigation in 2009 through April 30, 2012. As
noted, the Court believes this award is excessive, and if it had discretion to do so, it
would again award $450,000 in Prejudgment Fees, which is the sum that reflects a
reasonable relationship between the efforts expended and the results that Plaintiff
achieved.
116. In its discretion, and based on the above findings and conclusions, the
Court awards Plaintiff the sum of $24,875.62 for attorneys’ fees and expenses incurred between May 1, 2012, and June 30, 2012, to successfully defend against
Defendants’ JNOV motion. Those fees were related directly to the statutory claims
on which Plaintiff prevailed, and the amount of the award bears a reasonable relation
to Plaintiff’s success in defending against Defendants’ JNOV motion.
117. In its discretion, and based on the above findings and conclusions, the
Court awards Plaintiff the sum of $58,214.41 for attorneys’ fees and expenses
incurred between July 1, 2012, and September 5, 2013, in connection with the appeals
before the North Carolina Court of Appeals. This amount is based on efforts related
directly and distinctly to the statutory claims on which Plaintiff prevailed, and has a
reasonable relationship to Plaintiff’s success on appeal to the North Carolina Court
118. In its discretion, and based on the above findings and conclusions, the
Court awards Plaintiff the sum of $30,000 for attorneys’ fees and expenses incurred
between September 6, 2013, and May 19, 2015, while the case was before the North
Carolina Supreme Court. This amount is based on efforts related directly and
distinctly to the statutory claims on which Plaintiff prevailed, and has a reasonable
relationship to Plaintiff’s success on appeal to the North Carolina Supreme Court.
119. In its discretion, and based on the above findings and conclusions, the
Court awards Plaintiff the sum of $60,000 in attorneys’ fees and expenses incurred
between May 20, 2015, and the present, during which time the case was before this
Court following remand from the North Carolina Supreme Court.
120. Plaintiff is not entitled to recover interest on those awards. 121. Accordingly, Plaintiff Robert Paul Morris is entitled to recover from
Scenera Research, Inc. and Ryan C. Fry, jointly and severally, the total amount of
$843,405.59.
122. Except as provided in this Order, each party shall bear its own costs.
123. Having resolved the sole outstanding issue following remand from the
North Carolina Supreme Court and the other pending motions on attorneys’ fees, this
Final Judgment and Attorneys’ Fee Award is the Court’s final judgment and decree
in all respects.
IT IS SO ORDERED, this the 31st day of May, 2017.
/s/ James L. Gale James L. Gale Chief Business Court Judge
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