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Crocs, Inc. v. Effervescent, Inc

United States District Court, D. Colorado

September 30, 2017

CROCS, INC., Plaintiff,
v.
EFFERVESCENT, INC., HOLEY SOLES HOLDINGS, LTD., DOUBLE DIAMOND DISTRIBUTION, LTD., and U.S.A. DAWGS, INC., Defendants. U.S.A. DAWGS, INC. and DOUBLE DIAMOND DISTRIBUTION, LTD., Plaintiffs,
v.
RONALD SNYDER, DANIEL HART, THOMAS J. SMACH, ANDREW REES, GREGG RIBATT, ANDREW REDDYHOFF, GEORGE B. BOEDECKER, JR., LYNDON HANSON, DONALD LOCOCO, RAYMOND CROGHAN, RONALD FRASCH, MICHAEL MARGOLIS, JEFFREY LASHER, MICHAEL E. MARKS, PRAKASH MELWANI, JOHN P. MCCARVEL, ERIK REBICH, and SARA HOVERSTOCK, Defendants.

          ORDER

          PHILIP A. BRIMMER UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Crocs, Inc.'s Motion to Strike and for Sanctions Under 28 U.S.C. § 1927, Rule 37, or the Court's Inherent Powers [Docket No. 410].[1] The Court has jurisdiction pursuant to 28 U.S.C. § 1331.

         I. BACKGROUND

         On October 6, 2016, Magistrate Judge Kathleen M. Tafoya held a hearing in this case to resolve discovery disputes between the parties. Docket No. 302. Crocs, Inc. (“Crocs”) alleges that, at the hearing, counsel for Dawgs[2] displayed a shoe to the Court, specifically, a particular version of the Calzuro clog, and stated that the shoe provided evidence that Crocs knew its patents were invalid. Docket No. 410 at 1. The shoe displayed to the Court as prior art was not manufactured until 2012, id. at 2, six years after Dawgs filed this lawsuit alleging infringement of its patents.[3] See Docket No. 1.

         Crocs claims that the same shoe that Dawgs presented to the magistrate judge is also discussed and depicted throughout Dawgs' non-infringement and invalidity contentions (“invalidity contentions”), which Dawgs served on August 30, 2016. Docket No. 410-2. In its invalidity contentions, Dawgs asserts that the claims of the '858 and '789 Patents are anticipated by or rendered obvious by a shoe manufactured and designed by BIHOS S.R.L. (“BIHOS”), the Calzuro molded clog. See Docket No. 410-2 at 26-85. Dawgs also claims that Crocs' patents are invalid for omitting Ettore Battiston as one of the inventors of the patents. Docket No. 410 at 2; see also Docket No. 410-2 at 23, 62-63.

         On January 13, 2017, Crocs filed its motion for sanctions under § 1927, Rule 37 and the Court's inherent powers. Docket No. 410. Crocs claims that sanctions are appropriate because Dawgs has knowingly offered a shoe made in 2012 as invalidating prior art. Docket No. 410 at 2. In addition, Crocs requests sanctions based on Dawgs' claim related to Battiston's inventorship.[4] Id.

         II. ANALYSIS

         A. Failure to Confer

         Dawgs argues that Crocs' motion should be denied for failure to comply with D.C.COLO.LCivR 7.1(a). Docket No. 436 at 3. The Local Rule states that “[b]efore filing a motion, counsel for the moving party . . . shall confer or make reasonable good faith efforts to confer with opposing counsel . . . to resolve the disputed matter.” D.C.COLO.LCivR 7.1(a). The conferral requirement is not met by “making a demand for compliance, ” but instead requires communication and an effort to “compare views and attempt to reach an agreement, including by compromise if appropriate.” Hoelzel v. First Select Corp., 214 F.R.D. 634, 636 (D. Colo. 2003).

         Crocs admits that it did not confer with Dawgs regarding the instant motion, but argues that it “alerted Dawgs to its concerns about the shoe.” Docket No. 480 at 2. The “alert” referenced by Crocs is inadequate and frustrates the central purpose of the Local Rule, which is to attempt to resolve disputes between the parties without judicial intervention. Thus, the motion will be denied for failure to comply with D.C.COLO.LCivR 7.1(a). However, in the interest of judicial economy, the Court also considers the merits of the arguments put forward by Crocs.

         B. 28 U.S.C. § 1927

         Crocs argues that sanctions are appropriate under 28 U.S.C. § 1927. Docket No. 410 at 3. An attorney “who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.” 28 U.S.C. § 1927. “An attorney's actions are considered vexatious and unreasonable under § 1927 if the attorney acted in bad faith, ” Dreiling v. Peugeot Motors of America, Inc., 768 F.2d 1159, 1165 (10th Cir. 1985), or if the attorney's conduct constitutes a “reckless disregard of the duty owed by counsel to the court.” Braley v. Campbell, 832 F.2d 1504, 1511-12 (10th Cir. 1987). Sanctions under § 1927 are also appropriate when “an attorney is cavalier or bent on misleading the court; intentionally acts without a plausible basis; [or] when the entire course of proceedings was unwarranted.” Miera v. Dairyland Ins. Co., 143 F.3d 1337, 1342 (10th Cir. 1998) (internal quotations and citations omitted).

         A district court has “wide discretion in matters of sanctions” under § 1927. Hamilton v. Boise Cascade Exp., 519 F.3d 1197, 1207 (10th Cir. 2008). However, § 1927 should not be enforced so as to “dampen the legitimate zeal of an attorney in representing” a client. Braley, 832 F.2d at 1512. Accordingly, fees should only be awarded against attorneys whose conduct evinces a “serious and studied disregard for the orderly processes of justice.” Kiefel v. Las Vegas Hacienda, Inc., 404 F.2d 1163, 1167 (7th Cir. 1968); see also Raylon, LLC v. Complus Data Innovations, Inc., 700 F.3d 1361, 1370 n.6 (Fed. Cir. 2012) (“Establishing attorney misconduct under § 1927 implicates a higher level of culpability than Rule 11.”). Before awarding sanctions pursuant to § 1927, a court must make “specific findings” identifying “the extent of the multiplicity resulting from the attorney's behavior and the costs arising therefrom, ” as well as describing the “objectionable conduct” in sufficient detail to permit a meaningful response and facilitate appellate review. Braley, 832 F.2d at 1513.

         1. The ...


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