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The Ohio Willow Wood Co. v. ALPS South, LLC

United States District Court, S.D. Ohio, Eastern Division

June 20, 2019

ALPS SOUTH, LLC, Defendant.

          Elizabeth P. Deavers Magistrate Judge



         This matter is before the Court for consideration of Defendant's Objection (ECF No. 335) to the Magistrate Judge's Report and Recommendation (ECF No. 334). For the reasons that follow, the Court ADOPTS the Report and Recommendation (ECF No. 334) and DISMISSES Plaintiffs Objection (ECF No. 335).


         The Ohio Willow Wood Company ("Plaintiff'), an Ohio corporation, initiated this case on December 27, 2004. (ECF No. 1). On November 18, 2011, Plaintiff filed an Amended Complaint. (ECF No. 120). Plaintiff alleged that Defendant Alps South, LLC ("Defendant"), a Florida based limited liability company, infringed on Plaintiffs patent, U.S. Patent No. 5, 830, 237 (the '"237 Patent"). (Compl. ¶ 9, ECF No. 1). Defendant brought a counterclaim, contending that the '237 Patent is unenforceable because Plaintiff acquired it through inequitable conduct. (Answer ¶ 92, ECF No. 127). On August 10, 2012, the Court ruled on the parties' cross motions for summary judgment. (ECF No. 209). The Court granted summary judgment in favor of Plaintiff on the issue of inequitable conduct. (Op. & Or. at 1, ECF No. 209). However, the Court denied Plaintiffs Motion for Summary Judgment with respect to patent infringement, finding the '237 Patent claims at issue to be invalid. (Id.).

         Both parties appealed to the Federal Circuit. (See ECF Nos. 217 & 222). On November 15, 2013, the Federal Circuit reversed the Court's grant of summary judgment on the issue of inequitable conduct. (ECF No. 226). The case was remanded. (Id.). After holding a bench trial on the issue of inequitable conduct, the Court ruled in Defendant's favor. (ECF No. 278). The Court also granted attorney fees to Defendant pursuant to 35 U.S.C. §285. (Id.). Following an appeal, the Federal Circuit affirmed the Court's judgment that: (1) the '237 patent is unenforceable for inequitable conduct, and (2) Defendant is entitled to attorney fees. (ECF No. 290). The case was remanded again, this time for a determination of attorney fees owed to Defendant. (ECF No. 297). Before the Court issued a decision on regarding the amount of attorney fees, the parties settled and Plaintiff filed a stipulated dismissal. (ECF No. 305).

         On July 11, 2016, Defendant's former counsel, Shumaker, Loop, & Kendrick, LLP ("Shumaker"), moved for an attorney charging lien on Defendant. (ECF No. 299). Shumaker represented Defendant from 2008 until December 16, 2015, when Defendant discharged the firm. (Id. at 1-2). Shumaker seeks an equitable charging lien of $639, 946.19 against Defendant for unpaid legal services and unreimbursed expenses. (Id. at 1). Shumaker alleges that out of the $1, 236, 803.58 Defendant owed in attorney fees, $614, 893.08 remains unpaid. (Id. at 2). hi addition, Shumaker asserts that out of its $64, 744.42 in advanced expenses, $25, 053.10 was never reimbursed. (Id.). Defendant filed a Response in Opposition, asserting that it adequately compensated Shumaker by paying $700, 539.84 in fees and expenses. (ECF No. 300). On September 19, 2017, the Court granted Shumaker's Motion and ordered the imposition of a $639, 946.18 charging lien on any settlement funds paid to Defendant. (ECF No. 306). The $639, 946.18 charging lien covered Defendant's unpaid legal fees ($614, 893.08) and unreimbursed expenses ($25, 053.10). (Id.).

         On October 19, 2017, Defendant moved for reconsideration of the Court's Order. (ECF No. 307). The Court granted Defendant's motion in part, ordering that Shumaker disclose the invoice and billing information supporting its $639, 946.18 request witiiin twenty days. (Id.). In addition, the Court granted Defendant's request for an evidentiary hearing. (Id.). On June 15, 2018, the Court referred the evidentiary hearing to a United States Magistrate Judge pursuant to 28 U.S.C. § 636(b). (ECF No. 320). The Magistrate Judge held an evidentiary hearing on October 30, 2019 and October 31, 2019. (ECF Nos. 328 329). Following the hearing, the Magistrate Judge ordered briefing on the proper legal standard to apply to Shumaker's request for attorney fees. Defendant and Shumaker filed briefs on December 4, 2018. (ECF Nos. 332 & 333).

         On May 28, 2019, the Magistrate Judge issued a Report and Recommendation recommending that Shumaker's request for attorney fees be granted. The Magistrate Judge further recommended the imposition of a $639, 946.18 attorney charging lien on any settlement funds paid to Defendant in this matter. Defendant filed an Objection on June 11, 2019. (ECF No. 335). The matter is now ripe for review.


         Under Ohio common law, attorneys have a right to assert a lien against a judgment they obtain on behalf of their client. Filius v. Outdoor Sports Headquarters, Inc., No. C-3-90-358, 1995 WL1612532, at *2 (S.D. Ohio May 18, 1995). The Ohio Supreme Court outlined the concept of an attorney charging lien in Cohen v. Goldberger, 141 N.E. 656 (1923). As the Cohen court explained:

The right of an attorney to payment of fees earned in the prosecution of litigation to judgment, though usually denominated a lien, rests on the equity of such attorney to be paid out of the judgment by him obtained, and is upheld on the theory that his services and skill created the fund.

Id. at paragraph one of the syllabus.

         Although Cohen describes a lien attached to a judgment, courts have not interpreted this language as prohibiting the attachment of a lien to settlement proceeds. See, eg,, Filins, 1995 WL 1612532, at *2-3; Devis v. Pineview Ct. Condo. Ass'n, 8th Dist. Cuyahoga No. 102147, 2015- Ohio-2704, ¶¶ 5, 11. Nor have Ohio courts interpreted Cohen's language as prohibiting the attachment of a Hen when an attorney is discharged before the lawsuit is settled (or final judgment is entered in the case). See, e.g., Filius, 1995 WL 1612532, at *2; Cuyahoga Cnty. Bd. of Comm'rs v. Maloof Props., Ltd., 197 Ohio App.3d 712 (Ohio Ct. App. 2012). Additional factors that Ohio courts have considered when deciding whether to impose a charging lien include:

(1) the right of the client to be heard on the merits; (2) the right of an attorney to invoke the equitable jurisdiction of the courts to protect his fee for services rendered; (3) the elimination of unnecessary and duplicative litigation; (4) the opportunity for the client to obtain counsel to litigate the claim for attorney fees; (5) the propriety of an order as opposed to a judgment; (6) a forum for the presentation of witnesses, if necessary; and (7) the equitable nature of the proceeding.

Fire Prot. Res., Inc. v. Johnson Fire Prot. Co., 594 N.E.2d 146, 149-50 (Ohio Ct. App. 1991). Ultimately though, the decision to impose an attorney charging lien is based on the facts and circumstances of the particular case and is left to the sound discretion of the court. Kerger & Hartman, LLC v. A/ami, 54 N.E.3d 682, 686 (Ohio Ct. App. 2015).

         In her Report and Recommendation, the Magistrate Judge analyzed the Cohen factors and concluded "the equities in this case still favor the imposition of a lien." (R&R at 7, ECF No. 334). Additionally, the Magistrate Judge declined to recommend "that the Court use the lodestar analysis here, finding the Cohen analysis sufficient." (Id. at 12). Nevertheless, the Magistrate Judge recommended that, even applying the lodestar analysis, Shumaker's requested fees be found reasonable and awarded. (Id. at 12). Defendant contends that the fees sought by Shumaker are inequitable under the Cohen framework. (Obj. at 3, ECF No. 335). Furthermore, Defendant "also objects to the [Report and Recommendation] to the extent it based its conclusion solely on Cohen." (Id.). According to Defendant, the lodestar method described in Hensley v. Eckerhart, 461 U.S. 424 (1983) is the appropriate formula for determining the amount of the attorney charging lien. (Id.). Applying the lodestar framework, Defendant argues that the Court failed to give proper weight to the testimony of Thomas Shunk ("Mr. Shunk"), a witness who testified on behalf of Defendant at the evidentiary hearing. (Id.).


         As noted in the Report and Recommendation, "[t]he Court has already undertaken an analysis of whether Shumaker's request that an attorney charging lien be placed on any settlement funds obtained by [Defendant] satisfies the requirements outlined in Cohen and the additional factors analyzed by Ohio courts." (R&R at 5). This prior analysis notwithstanding, the Court begins by conducting a de novo review under Cohen.

         A. Co ...

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