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Errant Gene Therapeutics, LLC v. Sloan-Kettering Institute for Cancer Research

United States District Court, S.D. New York

June 21, 2018

Errant Gene Therapeutics, LLC, Plaintiff,
Sloan-Kettering Institute for Cancer Research, Defendant.



         On January 2, 2018, Magistrate Judge Stewart D. Aaron issued an Opinion and Order granting Defendant Sloan-Kettering Institute for Cancer Research's ("SKI") motion for attorney's fees, and ordering Plaintiff Errant Gene Therapeutics, LLC ("EGT") to pay SKI the sum of $88, 339.00. See Dkt. No. 181 [hereafter, "January 2 Order"]. On January 16, 2018, Plaintiff filed objections to the Magistrate's determination.

         Having reviewed Plaintiffs objections, for the following reasons the Court overrules the objections and upholds the attorney's fees award in full.

         I. BACKGROUND

         The Court assumes the parties' familiarity with the facts at issue. For more background, the Court refers the reader to Judge Ellis's orders of June 5, 2017 and October 16, 2017, see Dkt. Nos. 149, 177, and Judge Aaron's January 2 Order. For the limited purpose here, the Court offers the following summary.

         Magistrate Judge Ronald L. Ellis, to whom the matter was assigned for general pretrial supervision prior to his retirement, heard arguments on the parties' proposed protective orders, and issued an Opinion and Order on September 2, 2016 defining the scope of the "Attorneys' Eyes Only" (AEO) designation to include highly confidential research, development, and commercial information. See Dkt. No. 77. On November 3, 2016 and February 8, 2017, SKI filed two motions to enforce the Court's Protective Order and to sanction EGT for using protected information to initiate actions in other jurisdictions. See Dkt. Nos. 100, 134. In its November 3 motion, SKI alleged that EGT's complaint against BlueBird Bio, Inc., filed in the Circuit Court of Cook County, Illinois on September 27, 2016, used information learned in discovery that was designated AEO and confidential. In its February 8 motion, SKI alleged another violation of the protective order with respect to information EGT used in filing a complaint in the New York Supreme Court on January 26, 2017.

         On June 5, 2017, Judge Ellis issued an Opinion and Order finding that EGT did indeed violate the protective order in using AEO and confidential information obtained through discovery when filing both its Illinois and New York complaints. See Dkt. No. 149 at 7, 10 [hereafter, "June 5 Order"]. Judge Ellis enjoined EGT from further misuse of the AEO and confidential information obtained in this case, and ordered that EGT pay SKFs "reasonable attorneys' fees and costs of bringing these two motions for sanctions." Id. at 11.

         Shortly thereafter, on June 16, 2017, SKI filed another motion asking the Court to issue an Order to Show Cause why EGT should not be held in contempt of Court for continuing to prosecute the New York action. Dkt. No. 150. Judge Ellis held a contempt hearing, called for post-hearing briefing on certain issues, and issued two opinions on October 16, 2017, the first denying EGT's request to de-designate 17 documents' AEO designations and to order reclassification of other documents, Dkt. No. 176, and the second denying SKFs request to hold EGT in contempt. Dkt. No. 177 [hereafter, the "October 16 Order"]. In the latter order, Judge Ellis held that EGT had met its burden of demonstrating that it had an independently-developed factual basis for the allegations in its amended New York complaint and that EGT had not violated the Court's June 5 Order. October 16 Order at 17.

         On January 2, 2018, Judge Aaron, to whom the referral was reassigned following Judge Ellis's retirement, disposed of the lingering issue of an appropriate fee award following the June 5 Order. In his Opinion and Order, Judge Aaron considered SKFs application for $122, 100.20 in fees, adjusted downward the hourly rates and number of hours sought, and ordered EGT to pay $88, 339 to SKI on its fee application. See January 2 Order at 4-6.

         On January 16, 2018, EGT filed objections to the January 2 Order arguing, first, that it was unreasonable to award any legal fees to SKI in light of the subsequent ruling in the October 16 Order that EGT had an independent factual basis for its allegations, and, second, that the amount awarded was unreasonable or unjustified on various grounds. See generally Objections to Order of Magistrate Judge Awarding Attorneys' Fees ("Obj."), Dkt. No. 182. On January 30, 2018, SKI responded to EGT's objections. See SKFs Response to EGT's Objections to Order of Magistrate Judge Determining Amount of Attorneys' Fees ("Resp."), Dkt. No. 184.


         As an initial matter, the parties dispute whether the January 2 Order is a nondispositive matter, review of which is governed by Federal Rule of Civil Procedure 72(a), or a dispositive matter under Rule 72(b). If nondispositive, review of the Order is subject to the standard of "clearly erroneous or contrary to law." Fed.R.Civ.P. 72(a). If dispositive, the Court must conduct a de novo review of any part of the disposition that has been properly objected to. Fed.R.Civ.P. 72(b).

         The Order is nondispositive. SKFs two motions for sanctions at issue in the June 5 Order were brought pursuant to Federal Rules of Civil Procedure 16 and 37, which govern sanctions for discovery violations. "Monetary sanctions pursuant to Rule 37 for noncompliance with discovery orders usually are committed to the discretion of the magistrate, reviewable by the district court under the 'clearly erroneous or contrary to law' standard." Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522, 525 (2d Cir. 1990). While there are certain circumstances in which discovery sanctions have been deemed dispositive, those circumstances are inapplicable here. See, e.g., Flame S.A. v. Indus. Carriers, Inc., 39 F.Supp.3d 752, 757 (E.D. Va. 2014) (deeming sanction designating one party the alter ego of another dispositive); Cardell Fin. Corp. v. Suchodolski Assocs., Inc., 896 F.Supp.2d 320, 324 n.3 (S.D.N.Y. 2012) (treating a contempt ruling as dispositive); Cardiff v. Nat. Grange Mut. Ins. Co., 881 F.Supp.2d 266, 268 (D.R.I. 2012) (striking portions of interrogatory answers as sanction merits de novo review). The only authority EGT has offered for the proposition that a monetary sanctions order of the type at issue here is dispositive is Kiobel v. Millson. 592 F.3d 78 (2d Cir. 2010). However, Kiobel focuses on Rule 11 sanctions, and at the very least, the two judges writing in Kiobel agree that the imposition of most sanctions under Rule 37 is nondispositive. See Id. at 88 (Cabranes, J., concurring); id. at 97 (Leval, J., concurring); accord Cleversafe, Inc. v. Amplidata, Inc., 287 F.R.D. 424, 429 (N.D. 111. 2012) ("[A]ll three members of the Kiobel panel agreed that Rule 37 sanctions were nondispositive matters, although they could not agree on how Rule 11 sanctions should be treated."). The only reason EGT provides for why this order is dispositive is that the action has been dismissed, but EGT offers no authority for the proposition that this requires the Court to treat the January 2 Order any different than it would another monetary sanctions order for a discovery violation.

         Accordingly, the Court reviews Judge Aaron's January 2 Order under the "clearly erroneous" or "contrary to law" ...

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