Vitaform, Inc. v. Aeroflow, Inc.

2021 NCBC 79
North Carolina Business Court·Decided December 15, 2021·No. 19-CVS-3707·Published

Opinion

Vitaform, Inc. v. Aeroflow, Inc., 2021 NCBC 79.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION BUNCOMBE COUNTY 19 CVS 3707

VITAFORM, INC. d/b/a BODY AFTER BABY,

Plaintiff, ORDER AND OPINION ON v. DEFENDANTS’ MOTION FOR SANCTIONS AEROFLOW, INC. and MOTIF MEDICAL, LLC,

Defendants.

1. THIS MATTER is before the Court upon Defendants Aeroflow, Inc.

(“Aeroflow”) and Motif Medical, LLC’s (“Motif Medical”; together “Defendants”)

Motion for Sanctions (the “Motion”), (ECF No. 103), in the above-captioned case.

2. After considering the Motion, the parties’ materials offered in support of and

in opposition to the Motion, and other relevant matters of record, the Court hereby

GRANTS the Motion in part, DENIES the Motion in part, ENTERS the following

FINDINGS OF FACT and CONCLUSIONS OF LAW, and ORDERS relief as set

forth below.

Smith DeVoss, PLLC, by Jeffrey J. Smith and John R. DeVoss, and Wimer & Snider, P.C., by Jake A. Snider, for Plaintiff Vitaform, Inc. (d/b/a Body After Baby).

Ward and Smith, P.A., by Joseph A. Schouten, Haley R. Wells, and Jordan M. Spanner, for Defendants Aeroflow, Inc. and Motif Medical, LLC.

Bledsoe, Chief Judge. I.

FINDINGS OF FACT

A. Procedural Background

3. On 10 September 2021, Defendants submitted a Business Court Rule

(“BCR”) 10.9 dispute summary concerning Plaintiff Vitaform, Inc. (d/b/a Body After

Baby)’s (“Plaintiff”) disclosure of experts on 6 September 2021 (the “BCR 10.9

Dispute”). After receiving Plaintiff’s response, the Court convened a video conference

to consider the BCR 10.9 Dispute on 22 September 2021 (the “Conference”). All

parties were represented by counsel at the Conference.

4. After the Conference, on 23 September 2021, the Court entered its Order on

Defendants’ 10 September 2021 BCR 10.9 Dispute Summary and Scheduling Order

(the “September 23 Order”). 1 (Order on Defs.’ 10 Sept. 2021 BCR 10.9 Dispute Summ.

and Scheduling Order [hereinafter “Sept. 23 Order”], ECF No. 97.) In the September

23 Order, the Court concluded that Plaintiff “fail[ed] to timely comply with its

disclosure and exchange obligations for expert testimony under the [Case

Management Order (“CMO”), (Case Management Order, ECF No. 64),] and the

[North Carolina Rules of Civil Procedure].” (Sept. 23 Order ¶ 8.) Although the Court

denied Defendants’ request to “exclude testimony from Plaintiff’s three identified

experts or any other expert testimony sought to be introduced by Plaintiff at trial as

a sanction for Plaintiff’s [misconduct],” (Sept. 23 Order ¶ 8), the Court did afford

1 The Court incorporates herein by reference the findings and conclusions set forth in the

September 23 Order. Defendants relief. Specifically, the Court exercised its discretion to “extend the

expert discovery period and dispositive motion deadline to alleviate any prejudice

Defendants might otherwise suffer” and “to permit but not require Defendants to file

a motion for sanctions to seek their attorneys’ fees and costs incurred solely due to

Plaintiff’s failure to comply with its disclosure and exchange obligations under the

CMO and the [North Carolina Rules of Civil Procedure].” (Sept. 23 Order ¶ 8.) The

September 23 Order provided that Plaintiff would be “afforded a full opportunity to

reply” should Defendants seek sanctions. (Sept. 23 Order ¶ 8.)

5. Defendants filed the current Motion with supporting materials on 11 October

2021, seeking an award of their attorneys’ fees and costs under N.C. R. Civ. P. 37(b) for

Plaintiff’s discovery misconduct. In support of the Motion, Defendants tendered

numerous exhibits as well as an affidavit of Defendants’ lead counsel, Joseph A.

Schouten, (Defs.’ Mem. L. Supp. Mot. Sanctions Ex. K [hereinafter “Schouten Aff.”],

ECF No. 104.11). At the Court’s request, (see Interim Order on Defs.’ Mot. Sanctions,

ECF No. 107), Defendants provided an additional affidavit from Defendants’ counsel

including clarifying information on 23 November 2021, (see ECF No. 110).2

6. Defendants support their request with billing records documenting all tasks

and time worked for which Defendants seek attorneys’ fees (the “Billing Statements”).

(Schouten Aff. Ex. 4; Schouten Aff. Ex. 5.) The Billing Statements comprise two

invoices, one for Aeroflow and one for Motif Medical. Each Billing Statement contains

the date of the hours billed, the attorney or paralegal who conducted the respective

2 The Court refers to the initial version of Joseph A. Schouten’s affidavit filed on 11 October 2021 and located at ECF No. 104.11 for purposes of this Order. task, a brief description of the task, the hours spent on the task, the rate charged for

the task, and the total amount charged. (Schouten Aff. Ex. 4; Schouten Aff. Ex. 5.)

The two Billing Statements reflect identical time entries and charges to each

Defendant. (See Schouten Aff. Ex. 5.) In total, Defendants seek $23,982.00 in

attorneys’ fees for an asserted 75 hours of work performed by Defendants’ counsel

and paralegal in connection with the BCR 10.9 Dispute and this Motion. (Defs.’ Mem. L.

Supp. Mot. Sanctions 5 [hereinafter Defs.’ Br.], ECF No. 104; see Schouten Aff. Ex. 4;

Schouten Aff. Ex. 5.)

7. Plaintiff filed its response on 1 November 2021. (Pl.’s Resp. Br. To Defs.’ Mot.

Sanctions [hereinafter Pl.’s Resp.], ECF No. 105.) Plaintiff contends that Plaintiff’s

violation of the Court’s CMO “was not willful and was based upon a misunderstanding of

the [CMO] that was reasonable and made in good faith in light of all the circumstances.”

Plaintiff also asserts that Defendants have “suffered absolutely no material prejudice” from

Plaintiff’s violation and moreover that Defendants’ fee request is “grossly excessive based

on the sheer number of attorney hours billed.” (Pl.’s Resp. 3.)

8. The Motion has been fully briefed and is ripe for determination. The Court

concludes, in the exercise of its discretion, that a hearing would not assist the Court

in ruling on the Motion and thus decides this matter without a hearing. See BCR 7.4

(“The Court may rule on a motion without a hearing.”). II.

CONCLUSIONS OF LAW

A. Legal Standard

9. Trial courts retain the inherent authority “to do all things that are

reasonably necessary for the proper administration of justice.” Beard v. N.C. State

Bar, 320 N.C. 126, 129 (1987). To that end, it is “within the inherent power of the

trial court to order [a party] to pay [the opposing party’s] reasonable costs including

attorney’s fees for failure to comply with a court order.” Daniels v. Montgomery Mut.

Ins. Co., 320 N.C. 669, 674 (1987); see Goodyear Tire & Rubber Co. v. Haeger, 137 S.

Ct. 1178, 1186 (2017) (recognizing that the trial court’s “authority includes the ability

to fashion an appropriate sanction for conduct which abuses the judicial process[,]”

including “an assessment of attorney’s fees” (cleaned up)); Out of the Box Developers,

LLC v. LogicBit Corp., 2014 NCBC LEXIS 7, at *9–10 (N.C. Super. Ct. Mar. 20, 2014)

(“[The trial court’s] inherent authority includes the power to sanction parties for

failure to comply with court orders.” (cleaned up)); see also Cloer v. Smith, 132 N.C.

App. 569, 573 (1999) (“The trial court also retains inherent authority to impose

sanctions for discovery abuses beyond those enumerated in [N.C. R. Civ. P.] 37.”).

10.

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Vitaform, Inc. v. Aeroflow, Inc., 2021 NCBC 79 (N.C. Super. Ct. 2021).

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