973 F.3d 421
5th Cir.2020Background
- Ridgeway worked for Howmedica/Stryker; Stryker sued in Michigan for breach of contract, breach of fiduciary duty, and misappropriation of trade secrets under MUTSA; a jury found willful and malicious misappropriation.
- The Michigan court entered judgment on March 9, 2016; Stryker had 14 days to move for fees but Ridgeway filed Chapter 11 in Louisiana on March 23, triggering an automatic stay.
- Stryker filed a proof of claim in the bankruptcy case for $2,272,369.54 in attorney’s fees, relying on MUTSA and the “Common Core” doctrine to claim fees for work on related (non-MUTSA) claims.
- The bankruptcy court held a status conference and issued an April 7 order directing Ridgeway to list objectionable time entries and state bases for objections; Ridgeway failed to produce the required list.
- The bankruptcy court struck Ridgeway’s Common Core objections as a sanction for noncompliance, later allowed Stryker’s proof of claim (including Common Core fees), and the district court affirmed. Ridgeway appealed.
- The Fifth Circuit affirmed: judges (not juries) may award MUTSA fees under Fed. R. Civ. P. 54(d) and the bankruptcy court did not abuse discretion in striking objections as a sanction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides MUTSA attorney's-fee awards (judge or jury)? | Ridgeway: a jury must award attorney's fees. | Stryker: MUTSA vests fee-award power in the court; Rule 54(d) governs. | Judge may award fees; Rule 54(d) applies; MUTSA says the "court" may award fees. |
| Does Michigan law require fees to be proved to the jury at trial? | Ridgeway: Michigan practice requires jury involvement for prevailing-party fees. | Stryker: MUTSA is statutory and permits post-trial judicial fee awards; no state rule forcing trial proof. | MUTSA does not require fees be proved at trial; federal Rule 54 controls. |
| Can Stryker recover non-MUTSA fees under the Common Core (Hensley) doctrine? | Ridgeway: Common Core is limited (e.g., civil-rights context) and does not justify broad recovery here. | Stryker: Hensley/Common Core allows recovery for time on related claims that share a common core of facts. | Bankruptcy court allowed Common Core fees; appellate court affirmed result but did not reach merits because Ridgeway's objections were struck. |
| Was striking Ridgeway's Common Core objections for failure to comply with the April 7 order proper? | Ridgeway: He complied or compliance was impossible; any objections otherwise met Rule 3007/pleading requirements; lesser sanctions appropriate. | Stryker: Ridgeway willfully failed to list objectionable entries and failed to seek relief; striking was an appropriate sanction. | Strike upheld: noncompliance was willful, lesser sanctions inadequate; striking objections was not an abuse of discretion. |
Key Cases Cited
- Hensley v. Eckerhart, 461 U.S. 424 (fee recovery for claims sharing a common core of facts)
- Shady Grove Orthopedic Assocs. v. Allstate Ins. Co., 559 U.S. 393 (federal rules govern unless invalid or inapplicable to state practice issue)
- Gasperini v. Center for Humanities, Inc., 518 U.S. 415 (Erie/Seventh Amendment tensions on state practices and jury roles)
- Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (clear statutory language controls analysis)
- First Nat’l Bank v. Crescent Elec. Supply Co. (In re Renaissance Hosp. Grand Prairie Inc.), 713 F.3d 285 (standards of review for bankruptcy appeals)
- Perkins Coie v. Sadkin (In re Sadkin), 36 F.3d 473 (bankruptcy court equitable powers and sanctions)
- Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., 685 F.3d 486 (standards for Rule 37(b) sanctions)