Opinion ID: 211661
Heading Depth: 3
Heading Rank: 2

Heading: Ixys's Appeal

Text: 14 First, Ixys argues that its motion for attorney fees was timely. IR responds that the district court's October 15, 2002 judgment holding Samsung in contempt but not mentioning Ixys made Ixys a prevailing party, such that Ixys's motion for attorney fees in April 2004 was outside the 14-day time period and thus was untimely. The district court did not explain its rationale for concluding that Ixys's motion for attorney fees was untimely. Although IR argues that Ixys was a prevailing party as of the October 15, 2002 judgment holding Samsung in contempt, that judgment did not mention, nor did it dispose of, IR's claim against Ixys. It is difficult to imagine how a judgment that does not mention a party or a claim asserted against a party can be considered a final resolution of the claim against that party. Ixys properly could not be considered a prevailing party prior to this court's March 18, 2004 judgment reversing the district court's holding of contempt against Samsung and reversing the denial of Ixys' motion to clarify, vacate, or modify the injunction. Int'l Rectifier, 361 F.3d at 1362 ([R]egardless of Samsung's activities, which we have concluded do not invoke liability in any case, IXYS, as a non-party, cannot be bound by the Permanent Injunction.). Thus, Ixys's motion for attorney fees was not untimely. The district court's denial of attorney fees on this basis was an abuse of discretion. 15 Next, Ixys challenges the district court's finding that its intervention in the district court's determination of an appropriate sanction against Samsung was purely voluntary. Ixys additionally challenges the district court's finding that it did not substantially contribute to the resolution of the issues in this case and the legal effect that the district court gives that finding. IR responds that intervenors must show some special contribution to the resolution of the issues to entitle them to an award of attorney fees. As we noted supra, Ixys is a prevailing party, if at all, by virtue of this court's March 18, 2004 judgment reversing the district court's judgment of contempt. Thus, to the extent the district court precluded Ixys from recovering attorney fees based on Ixys's allegedly voluntary participation in the determination of an appropriate sanction against Samsung, the district court abused its discretion. The determination of an appropriate sanction for Samsung was only part of the litigation and was the only part in which Ixys could even arguably be said to have voluntarily participated. Even if Ixys's participation in that portion of the litigation was voluntary, an award of attorney fees would not be precluded. The district court abused its discretion in denying Ixys's entire fee request on this basis. 16 We consider the determination of the reasonableness of a fee award pursuant to a consent judgment entered by a federal district court as a question of federal law. To the extent that Ixys's fee request is based on time as an intervenor, that portion of the fee request is subject to special scrutiny to ensure that hours reimbursed were not redundant or unnecessary. Equal Employment Opportunity Comm'n v. Clear Lake Dodge, 60 F.3d 1146, 1153-54 (5th Cir.1995). However, the mere fact that a party voluntarily intervened does not preclude an award of attorney fees. See id.; see also Seattle Sch. Dist. No. 1 v. Washington, 633 F.2d 1338, 1349-50 (9th Cir.1980) (To retrospectively deny attorney's fees because an issue is not considered or because a party's participation proves unnecessary would have the effect of discouraging the intervention of what in future cases may be essential parties.); cf. Donnell v. United States, 682 F.2d 240, 247-48 (D.C.Cir.1982) (If a lawsuit is successful, but the intervenor contributed little or nothing of substance in producing that outcome, then fees should not be awarded.). Thus, the district court's conclusion that a recovery was precluded because Ixys voluntarily participated was an abuse of discretion. 17 The district court also concluded that IXYS did not substantially contribute to the resolution of the issues in this case during its participation as an intervenor. Ixys Order at 3. Ixys challenges that finding, arguing that it was responsible for the district court's reduction in sanctions based on the fact that IR was seeking a double recovery. IR responds that Ixys is incorrect because the district court attributed the argument to Samsung. That, however, does not answer the question of which party was responsible for the argument. This court is unable to find facts in the first instance on appeal. Because the district court made no findings to substantiate its conclusion that Ixys did not substantially contribute to the resolution of the sanctions issues, we vacate that finding and remand for the district court to make fact findings in the first instance. 18 Ixys's third argument is that the district court clearly erred in relying on its previously vacated finding that Ixys and Samsung agreed to subvert the injunction. We agree. The district court noted that [w]hile the Federal Circuit concluded that IXYS and Samsung could not be punished in contempt for that decision [to maintain business as usual], such conduct is hardly to be encouraged. It would be inequitable under the circumstances to make an award of fees in favor of IXYS. Id. at 5. In the previous appeal to this court, we first held that there was no legal basis for the district court's theory of infringement and then said, even if a legal basis were apparent, the district court's finding of an agreement to subvert the injunction is not supported by any evidence, let alone the clear and convincing evidence required in a contempt proceeding. Int'l Rectifier, 361 F.3d at 1361. The district court was not free to disregard these holdings. Thus, the district court's conclusion that Ixys's conduct justified a denial of attorney fees was an abuse of discretion. 19 Ixys next argues that the district court erroneously concluded that Ixys was not entitled to an attorney fee award pursuant to paragraph 7 of the consent judgment between Samsung and IR and pursuant to 35 U.S.C. § 285. IR argues that Ixys is not entitled to attorney fees under the consent judgment because it was not a party to that agreement and that the district court did not abuse its discretion in denying a fee award under 35 U.S.C. § 285. First, Ixys argues that under California law it is entitled to an award of attorney fees pursuant to the consent judgment if attorney fees could be awarded against it pursuant to the consent judgment. California state law is relevant to the interpretation of the substantive provisions of the consent judgment. Cf. Reed v. Callahan, 884 F.2d 1180, 1185 (9th Cir.1989). California Civil Code section 1717(a) provides: 20 In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to other costs. 21 In Babcock v. Omansky, 31 Cal.App.3d 625, 107 Cal.Rptr. 512 (2d Dist.1973), cited by Ixys, the wife (Bertha) of a party to four promissory notes was sued on the notes as a joint venturer and partner with her husband, as well as his agent and employee. Her husband was sued on the notes as a separate defendant. The trial court issued an order of nonsuit with respect to this claim against Bertha, and Bertha, in turn, sought attorney fees based upon an attorney fee provision in the promissory notes. In reversing the trial court's denial of attorney fees, the California appellate court said, It seems clear, by virtue of the above, that plaintiffs were thus seeking recovery on the notes; having won an order of nonsuit as to this tenth cause of action, Bertha was the `prevailing party' and entitled to attorney's fees under section 1717. Id. at 633, 107 Cal.Rptr. at 518. 22 Although Babcock was rejected by other appellate courts in California, the California Supreme Court cited it approvingly in Reynolds Metals Co. v. Alperson, 25 Cal.3d 124, 158 Cal.Rptr. 1, 599 P.2d 83 (1979). Reynolds Metals involved a suit against directors and shareholders of two bankrupt corporations on two promissory notes on the theory that the two bankrupt corporations were merely alter egos of the directors and shareholders. The trial court rejected the alter ego theory and awarded the directors and shareholders attorney fees. In affirming the trial court's holding that the directors and shareholders were entitled to attorney fees, the California Supreme Court said, Its purposes require section 1717 be interpreted to further provide a reciprocal remedy for a nonsignatory defendant, sued on a contract as if he were a party to it, when a plaintiff would clearly be entitled to attorney's fees should he prevail in enforcing the contractual obligation against the defendant. Id. at 128, 158 Cal.Rptr. at 3, 599 P.2d at 85. The court then explained, [s]ince [defendants] would have been liable for attorney's fees pursuant to the fees provision had plaintiff prevailed, they may recover attorney's fees pursuant to section 1717 now that they have prevailed. Id. at 129, 158 Cal.Rptr. at 3, 599 P.2d at 86. 23 A more recent decision of the California Supreme Court has provided an even broader formulation. In Santisas v. Goodin, 17 Cal.4th 599, 609-12, 71 Cal.Rptr.2d 830, 837-38, 951 P.2d 399, 406-07 (1998), the California Supreme Court noted that section 1717 applies in two situations. The first situation is when a contract provides a right to attorney fees to one party but not the other. The second situation described by the court is when a person sued on a contract containing a provision for attorney fees to the prevailing party defends the litigation by successfully arguing the inapplicability, invalidity, unenforceability, or nonexistence of the same contract. Id. at 611, 71 Cal.Rptr.2d at 837, 951 P.2d at 406 (quotation marks and citation omitted). The court explained, 24 If section 1717 did not apply in this situation, the right to attorney fees would be effectively unilateral—regardless of the reciprocal wording of the attorney fee provision allowing attorney fees to the prevailing attorney—because only the party seeking to affirm and enforce the agreement could invoke its attorney fee provision. To ensure mutuality of remedy in this situation, it has been consistently held that when a party litigant prevails in an action on a contract by establishing that the contract is invalid, inapplicable, unenforceable, or nonexistent, section 1717 permits that party's recovery of attorney fees whenever the opposing parties would have been entitled to attorney fees under the contract had they prevailed. 25 Id. at 611, 71 Cal.Rptr.2d at 837-38, 951 P.2d at 406-07. We conclude based on these decisions of the California Supreme Court that if IR would have been entitled to attorney fees against Ixys if it prevailed, Ixys is entitled to claim attorney fees against IR based on the agreement. Because IR sued Ixys for a violation of the injunction contained within the consent judgment as if Ixys were a party to that consent judgment, we conclude that California law entitles Ixys to the reciprocal remedy of attorney fees in this case. If IR had prevailed in its assertions that Ixys was violating that consent judgment by aiding and abetting Samsung, IR would have been entitled to assert a claim for attorney fees against Ixys in much the same way as the alleged coventurer or partner in Babcock or the shareholders and directors who allegedly used the corporation as their alter egos in Reynolds. See Portland Feminist Women's Health Ctr. v. Advocates for Life, Inc., 877 F.2d 787 (9th Cir.1989) (affirming district court's order in contempt proceeding holding nonparties jointly and severally liable with parties for plaintiffs' attorney fees); see also Peterson v. Highland Music, Inc., 140 F.3d 1313, 1323 (9th Cir.1998) (`[T]o be held liable in contempt, it is necessary that a non-party respondent must either abet the defendant [in violating the court's order] or be legally identified with him' and that the non-party have notice of the order. (quoting NLRB v. Sequoia Dist. Council of Carpenters, AFL-CIO, 568 F.2d 628, 633 (9th Cir.1977) (quotation marks and citation omitted))). Thus, we reverse the district court's denial of fees pursuant to the consent judgment. 26 Because Ixys is entitled to attorney fees under the consent judgment, we need not address Ixys's additional arguments regarding 35 U.S.C. § 285. Ixys also argues that we should hold that its attorney fee request was reasonable. However, the award of reasonable attorney fees in the first instance is for the district court, not this court. See Gerling Global Reinsurance Corp. of Am. v. Garamendi, 400 F.3d 803, 811 (9th Cir.2005) (reversing the district court's denial of fees and remanding this case to the district court with instructions to exercise its discretion to determine a reasonable amount of attorney's fees). 27 Finally, in the event of a remand, Ixys requests that this court remand to a different judge. Ixys argues that Judge Real's repeated characterizations of its conduct with Samsung as being somehow wrongful and not to be encouraged even though not legally sanctionable, combined with its repeated rulings in IR's favor, warrant reassignment. IR argues that no cause exists for such a reassignment and that a reassignment would be wasteful of judicial resources. Remands to different district court judges are exceedingly rare. In re Yagman, 796 F.2d 1165, 1188 (9th Cir.1986). In evaluating such a request for relief, the Ninth Circuit considers: 28 (1) whether the original judge would reasonably be expected upon remand to have substantial difficulty in putting out of his or her mind previously-expressed views or findings determined to be erroneous or based on evidence that must be rejected, (2) whether reassignment is advisable to preserve the appearance of justice, and (3) whether reassignment would entail waste and duplication out of proportion to any gain in preserving the appearance of fairness. 29 McCalden v. Cal. Library Ass'n, 955 F.2d 1214, 1224 (9th Cir.1990) (quoting Davis & Cox v. Summa Corp., 751 F.2d 1507, 1523 (9th Cir.1985) (citation omitted)). The cases in which such relief has been granted reflect rare and compelling circumstances. See, e.g., United States v. Jacobs, 855 F.2d 652, 656-57 (9th Cir.1988) (describing the district court's conduct in improperly dismissing a case and refusing to reassemble the jury when the error was discovered two minutes later along with other egregious conduct); Yagman, 796 F.2d at 1187-88 (describing district court's improper award of $250,000 sanction against counsel based on his total conduct without specifying specific infractions). Given the extremely high threshold, we do not think reassignment is appropriate in this case. On remand, we are confident that Judge Real can put aside any conviction that Ixys's conduct was somehow wrongful even if not legally sanctionable in considering an appropriate award of attorney fees to both Samsung and Ixys.