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Stryker Corp. v. Prickett

United States District Court, W.D. Michigan, Southern Division

December 5, 2016

Stryker Corporation, et al., Plaintiff,
v.
William Prickett, et al., Defendants.

          Hon. Robert Holmes Bell Judge.

          MEMORANDUM OPINION

          PHILLIP J. GREEN United States Magistrate Judge.

         This matter is before the Court on plaintiff Stryker Corporation's (“Stryker”) Petition for Attorneys' Fees and Costs (ECF No. 177), filed pursuant to the Court's order of civil contempt against defendants William Prickett and Physician's Choice Medical Repair, Inc. (“PCMR”) (ECF No. 172). Stryker seeks $32, 357.60 in fees and $3, 769.24 in costs associated with its motion for contempt and the related third-party discovery. (ECF No. 177, PageID.2380). Defendants have not responded to the petition.

         Also before the Court is defendants' Statement Regarding Costs. (ECF No. 180). The Court ordered defendants to provide the actual costs incurred in generating revenue from certain hospitals, which was obtained in violation of the preliminary injunction, for the purpose of determining the amount of profits to be disgorged. (ECF No. 172, PageID.1986). Defendants claim $46, 205.12 in costs (ECF No. 180, PageID.2437), and they assert that invoices reflecting a total of $58, 193.76 in revenue should be exempt from disgorgement, as they were “not wholly attributable to the provision of Stryker-related services, repairs, or parts.” (ECF No. 180-1, PageID.2439). Stryker objects to the statement of costs, arguing that defendants failed to independently verify the costs claimed, thus failing to meet their burden of proof. (ECF No. 181, PageID.2441-42). Stryker also objects to defendants' assertion that some of the invoices should be exempt from disgorgement. (Id., PageID.2442-43).

         Having considered Stryker's petition for fees and costs, including its supporting materials, and in light of defendants' failure to object, Stryker's petition will be granted in full. For the reasons articulated herein, Stryker's objections to defendants' statement of costs will be sustained.

         Procedural and Factual Background

         On June 17, 2016, Stryker filed a motion for contempt against defendants William Prickett and PCMR. (ECF No. 107). Stryker accused defendants of violating the Court's October 22, 2014, preliminary injunction (ECF No. 24), as well as the Court's December 18, 2014, order compelling defendants to produce certain discovery (ECF No. 40). (Pltfs' Br. at 1, ECF No. 108, PageID.656). Specifically, Stryker complained that defendant William Prickett violated the preliminary injunction by continuing to service Stryker patient handling equipment at Nash General Hospital, Wilson Medical Center, and Atlantic Gastroenterology. (Id., PageID.659-60; see Invoices at ECF No. 108-5, 108-6, and 108-7, respectively). Defendants opposed the motion. (See ECF No. 144).

         The undersigned judicial officer conducted a lengthy hearing on July 11, 2016. (Minutes, ECF No. 148). On July 22, 2016, the undersigned entered a Report and Recommendation (“R&R”) certifying facts in favor of civil contempt, and recommending that the Honorable Robert Holmes Bell adjudge defendants to be in civil contempt. (ECF No. 152). The undersigned also recommended that Judge Bell consider imposing certain enumerated sanctions. (Id., PageID.1326-27).

         On August 18, 2016, Judge Bell conducted a hearing on Stryker's motion for contempt. (Minutes, ECF No. 171). During this hearing, defendants confirmed that they had no objection to the R&R or to the sanctions recommended therein. (See Aug. 19, 2016, Order, ECF No. 172, PageID.1985). After reviewing the R&R de novo, as required by 28 U.S.C. § 636, Judge Bell adopted it as the findings and conclusions of the Court. (Id., PageID.1986).

         Judge Bell ordered, among other things, that Stryker file a petition “for reasonable costs, including attorneys' fees, associated with the motion for contempt (ECF No. 107) and the third-party discovery, including Rule 30(b)(6) depositions, relating to the invoices obtained from Nash General Hospital, Wilson Medical Center, and Atlantic Gastroenterology.” (ECF No. 172, PageID.1987). Judge Bell advised defendants that failure to file a timely response will result in a waiver of the issues raised in the petition. (Id.). Defendants have filed no response.

         Judge Bell also ordered, as a sanction, that defendants disgorge profits they obtained from the three hospitals in question (ECF No. 172, PageID.1986), which are reflected in invoices contained in Exhibits E, F, and G to Stryker's contempt motion (ECF No. 108-5, 108-6, and 108-7, respectively). The profits are to be determined by subtracting defendants' “actual costs, ” as proven by defendants, from the amounts billed in the invoices. (See id.).

         Discussion

         A. Stryker's Petition for Attorneys' Fees and Costs

         Under the Federal Rules of Civil Procedure, the Court has discretion to impose a number of sanctions for violations of its discovery orders. See Fed. R. Civ. P. 37(b)(2)(A). Among those sanctions are “treating as contempt of court the failure to obey any [such] order.” Fed.R.Civ.P. 37(b)(2)(A)(vii). In addition, “the court must order the disobedient party . . . to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.” Fed.R.Civ.P. 37(b)(2)(C). A finding of civil contempt for violating the Court's preliminary injunction provides an independent basis for awarding fees and costs resulting from the violation. See ...


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