Traxcell Asks High Court To Review Atty Fee Fight
Law360 (November 29, 2023, 9:44 PM EST) -- Traxcell Technologies LLC has asked the U.S. Supreme Court to take up an appeal concerning attorney fees owed to Sprint and Verizon after the telecommunication companies beat its infringement suit, arguing that the alleged "exceptional" litigation conduct occurred before a final ruling.
A Tuesday petition for a writ of certiorari from Traxcell, which filed for bankruptcy earlier this year, claimed that the Federal Circuit erred when it affirmed attorney fee awards to units of Sprint Corp. and Verizon Communications Inc. based on so-called "baseless" litigation conduct from Traxcell's attorney, William Ramey III of the Houston firm Ramey LLP, as the conduct in question occurred before the court adopted a magistrate judge's ruling.
"It is black letter law that a Magistrate's ruling is not final until approved by a district court. It was [an] error for the Panel to base its fee award entirely upon rulings that were not final and could not have been final until December 11, 2019," Traxcell said. "None of the conduct that was found to be "exceptional" under [federal law] occurred after the Magistrate Judge's recommendation was made final on December 11, 2019."
Texas-based Traxcell, which has been accused of being a "patent troll" by groups like the Electronic Frontier Foundation, is on the hook for about $784,000 in fees owed to Sprint and $132,000 in fees owed to Verizon, after the companies won rulings that Traxcell's patent lawsuits were legally frivolous.
AT&T Inc., which had also been named in those lawsuits, did not request any fees, as it ended its litigation with Traxcell back in 2019.
A panel of Federal Circuit judges ruled in July without comment that the lower court was right to order Traxcell to pay legal fees incurred by lawyers for the major telecom firms.
Traxcell is now appealing that decision based on arguments that the Federal Circuit departed from typical proceedings and court precedent by issuing fee awards based on conduct that occurred before U.S. Magistrate Judge Roy Payne's ruling in a separate, but related, case was finalized.
According to the Nov. 22 writ of certiorari, which was docketed Tuesday, Judge Payne's decision issued in May 2019 in another consolidated infringement case Traxcell filed against Huawei and Nokia over the same subset of patents recommending summary judgment in the defense's favor was not finalized until a judge in the Eastern District of Texas overruled the petitioner's objections and adopted the magistrate judge's decision in December 2019.
"Because petitioner's objections remained alive until that final ruling, there was no basis in law or reason for the Panel to assign it with knowledge prior to that ruling that its claims were baseless," Traxcell said.
The December 2019 ruling for the separate case against Huawei and Nokia was ultimately dispositive to Traxcell's claims against Sprint and Verizon, and in April 2020, U.S. District Judge Robert Schroeder III adopted the magistrate judge's recommendation in favor of the telecom companies.
Following the finalization of Judge Payne's ruling, Sprint and Verizon asked the court for attorney fees for the litigation occurring after the magistrate judge's May 2019 recommendations, which were ultimately granted in March 2022.
Traxcell attempted to appeal the fees, but they were affirmed by Judge Schroeder in November and December for Sprint and Verizon, respectively.
According to Traxcell's petition, Ramey's litigation conduct can not be the basis for claiming that the company "knew or should have known" that its claims were baseless, as it occurred prior to the December 2019 final ruling.
Finding otherwise would be "contrary to the law and fundamentally unfair," Traxcell said.
"It is well-established by this Court that the recommendation of a Magistrate Judge is not a final decision and does not in any way dispose of a party's claims," Traxcell added.
Traxcell is asking the high court to either vacate or reverse the attorney fees granted to both Sprint and Verizon and find that the case was not exceptional.
Since the Federal Circuit's July decision, Traxcell has filed for Chapter 11 bankruptcy in the Western District of Texas.
